Business tendency survey for manufacturing, mining and quarrying, Q4 2016

The business tendency survey for the fourth quarter of 2016 shows a downturn in total production compared with the third quarter of 2016. This decline comes in particular for manufacturers of capital goods, who are experiencing a further decline in production. The low activity among suppliers to the oil and gas sector continues to contribute to the decline and is particularly related to the following industries: 

• Machinery and equipment
• Building of ships, boats and oil platforms
• Repair and installation of machinery

Producers of intermediate goods reported a small increase in production in the last quarter. There was an increase in industries such as wood and wood products and in rubber, plastic and mineral products. Basic chemicals had a clear fall in production. At the same time there was increased production within consumer goods, especially for manufacturers of food. A fall in production in capital goods contributed to a decline in the total industrial production, which has been the case for every quarter in 2016. 

The overall employment declined in the fourth quarter of 2016. The decline comes from producers in all of the three main industrial groupings. The fall is most significant among producers of capital goods that are particularly connected to the oil and gas sector. 

Decline in new orders and in the total stock of orders

There was a decline in the total stock of orders in the fourth quarter. New orders from both the domestic and export markets also fell from the pervious quarter. Producers of capital goods saw a clear decline in new orders and the stock of orders. For manufacturers of intermediate goods there was an increase in the total stock of orders and in orders from the domestic market. Orders from the export market decreased, with the export-oriented non-ferrous metals industry having a clear drop in new orders from the export market. For manufacturers of consumer goods there was an increase in new orders from both domestic and export markets along with an increased stock of orders. 

Overall, prices went down in the export market, whilst remaining almost unchanged in the domestic market. The appreciation of the Norwegian krone against major trading partners' currencies in the fourth quarter could explain some of the decline in prices in the export market for some industries. For manufacturers of capital goods, there was a decline in both markets, while producers of intermediate goods had an almost unchanged development in both the domestic and export market. Consumer goods showed an increase in prices in both markets, which can particularly be attributed to higher prices in food products. 

Positive expectations for the first quarter of 2017

The general outlook for the first quarter of 2017 is positive. However, business leaders report that investment plans are adjusted downwards and that employment will see a further drop. New orders from both the domestic market and export market are expected to increase. The total stock of orders is expected to have a small incline. Producers of intermediate goods and consumer goods are optimistic about the fourth quarter, while manufacturers of capital goods are negative in their expectations. 

The industrial confidence indicator in the fourth quarter stood at -0.4 (seasonally-adjusted net figures), up from -5.1 in the previous quarter. This is below the historical average of 3.0. Values above zero indicate that total output will grow, while values below zero indicate that total output will fall. International comparisons of the industrial confidence indicator are available from Eurostat (EU), The Swedish National Institute of Economic Research and Statistics Denmark. 

Decrease in capacity utilisation

Average capacity utilisation for Norwegian manufacturing had a marginal decrease and was calculated to 76.7 per cent at the end of the fourth quarter of 2016, compared with 77.1 in the third quarter of 2016. This is below the historical average of 80.3 per cent. Capital goods pull this indicator down, where machinery and equipment and building of ships, boats and oil platforms have the lowest capacity utilisation registered for these industries since these measurements began in 1990. International comparisons of average capacity utilisation are available from Eurostat (EU). 

The average number of working months covered by the current stock of orders was 4.0 in the fourth quarter of 2016. This is slightly above the level of the previous quarter, and above the historical average for the indicator of 3.9. The resource shortage indicator is slightly down from the previous quarter. There is still little shortage of labour, good access to raw materials and electrical power, and few industry leaders are reporting full capacity utilisation.

Timeliness

The survey data was collected in the period from 8 December 2016 to 26 January 2017. 

Assessment of Q4 2016 and the short-term outlook¹