Increase in Mainland GDP in May

Activity in the Norwegian economy fell abruptly after the introduction of infection control measures on March 12. The measures were eased in the second half of April, and this continued in May. Among other things, 5-10. grade in elementary school, high school and driving schools opened in week 20, at the same time as bingo halls, while indoor stadiums were opened the week before. The reopening in May drove up the GDP growth.

The greatest contributions to growth in May, however, came from health and social work and other services activities, following the reopening of day care centers and businesses with one-to-one contact at the end of April. This gave a positive carry-over at the beginning of May.

- There was strong growth in May in some of the industries that have been most affected by the lockdown, says head of national accounts, Pål Sletten. At the same time, there was a further decline in business services, in parts of manufacturing, and in services incidental to oil and gas extraction. This dampened the upturn for the Mainland economy somewhat.

Mixed picture

Arts, entertainment and other service activities rose over 50 per cent in May, but compared to February, the level of activity in the industry was still low. Continued infection control measures dampened the activity of the industry: Among other things, events with up to 50 people were only allowed on 7 May, while 200 people were legal from 15 June. In addition, fitness centers remained closed until mid-June. Transport activities excl. ocean transport, as well as accommodation and food service activities, rose significantly in May, but the upturn comes after two months of significant decline. Activity levels in these industries were between 30 and 60 per cent lower in May compared to February.

Wholesale and retail trade and repair of motor vehicles rose in May, and compared with other industries, activity levels were only slightly lower in May than in February. The growth in the industry is linked to the rise in household consumption of goods.

Administrative and support service activities fell almost 15 per cent in May. Herein we find rental, leasing, travel agencies and tour operators, all of which are affected by both reduced activity in other industries and reduced demand from households. Service activities incidental to oil and gas fell by just under 10 per cent in May. Both these business areas have experienced a sustained decline since the outbreak of the Corona pandemic.

Health and social work rose just over 10 per cent in May. This is mainly due to the reopening of kindergartens in the second half of April. Nevertheless, the level of activity was more than 10 per cent lower in May compared with February, among other things because of continued lower activity in hospitals, GPs and dentists. In addition, kindergartens operated with reduced opening hours in May compared to normal.

The remaining service industries were almost flat from April to May. Overall, the service industries rose 2.9 per cent in May.

Manufacturing and mining fell 1.2 per cent from April to May. Particularly refined petroleum, chemical and pharmaceutical products slowed down. However, building of ships, oil platforms and modules and other transport equipment, as well as the furniture industry, grew. This can be seen in the context of the fact that these industries are relatively labor-intensive, and thus show improvement as a result of less stringent infection control measures.

Measured in constant prices, extraction of crude oil and natural gas fell 0.4 per cent in May, according to preliminary estimates from the Norwegian Petroleum Directorate. Total Norwegian gross domestic product, including oil and ocean transport, grew 1.9 per cent from April to May.

Increased consumption

Household consumption rose 4.8 per cent in May after two months of sharp decline. Consumption of both goods and services grew.

Service consumption was particularly affected by daycare and other personal services. Restaurant and hotel services, as well as transport services, also rose sharply in May after major falls in the previous two months. Consumption of restaurant and hotel services and transport services remained at low levels compared to February. Overall, service consumption rose 5 per cent in May.

Consumption of goods rose 4.5 per cent in May. Purchases of clothing and footwear increased the most, but also purchases of food and beverages grew.

Final consumption expenditure of general government rose 2.8 per cent from April to May, following a fall in March and April. The reopening of kindergartens is the main reason for the rise. Developments in final consumption expenditure of general government are based on various indicators but will be revised when accounts for the central government and municipalities for the second quarter become available. These figures must therefore be regarded as preliminal.

Investments

Gross fixed capital formation rose in May after a decline in March and April. The purchase of F-35 fighter aircraft contributed the most to the growth in investments. The information base for the investments is limited and the figures are therefore more uncertain. Investments in oil and gas extraction, industry and power supply, as well as housing investments are part of the monthly source, but for many other business areas the information is lacking. Investments are likely to continue to be somewhat more uncertain than usual due to the unusual situation we are in.

Export and import

Exports of traditional goods fell 4.5 per cent in May, after falling both in March and April. In May, the fall was driven by lower exports of both metal and fish. The decline in metal exports is mainly due to aluminum, which goes to the automotive and construction industry. Overall, exports were roughly unchanged compared to April, driven by increased crude oil exports. Measured at current prices there was a 2.7 per cent fall. This was partly due to reduced prices for natural gas as well as for traditional goods overall.

Total imports were about the same level as April, but this is partly because the military took delivery of three new F-35 fighter jets. However, imports of traditional goods fell for the third consecutive month. The fall in May was partly due to lower imports of vehicles, especially cars. Car imports have fallen drastically over the past three months, as seen in household consumption of goods.

Revisions

In connection with new monthly figures, there will be revisions. The statistics used will not normally change backwards, but seasonally adjusted series can still be affected. This is a consequence of the fact that the basis for the seasonal adjustment changes when new periods are added. The National Accounts recently published an article on the revisions in the monthly national accounts