Slight rise in mainland GDP in July

Norway experienced an abrupt decrease in the economic activity after the pandemic control measures of March 12 was introduced. The measures have gradually been eased from mid-April on, and has resulted in activity growth in the following months including July, according to new figures from National accounts.

- It is important to keep in mind that July is a vacation month. To some industries this means low activity levels, to others high, says Pål Sletten, head of national accounts. It is difficult to say much about the pace of economic recovery after the sudden stop in March and April based on the July estimate, and the figures must be interpreted with caution, he adds.

Public swimming pools and gyms were reopened in the middle of June. At the same time public events for crowds up to 200 people, and travel to other Scandinavian countries were allowed. These factors contributed to a positive carry-over at the start of July.

The greatest single contribution to the GDP growth was from accommodation and food service activities. Statistics show that the number of hotel- and camping accommodation levels in July were normal. This means that Norwegian demand for the most part replaced what is usually demanded by tourist.

Mixed picture

The activity in accommodation and food service activities rose about 30 per cent in July. Transport activities excluding ocean transport increased more than 2 per cent, mostly due to aviation transport. The levels of activity in both industries fell abruptly in March and April and were still 20 per cent lower in July than in February despite growth the last three months.

Wholesale and retail trade and repair of motor vehicles grew in July, while administrative and support service activities decreased for the sixth month in a row. In July the fall was just under 20 per cent. Administrative and support service activities include the industries of rental, leasing, travel agencies and tour operators, all of which are affected by both reduced activity in other industries and reduced demand from households because of the pandemic outbreak and the measure put in place to control it. For June the aggregate is revised down since last publication. This is due to new information on travel agencies.

Health- and social work fell in July after growth in both May and June. According to figures provided from the Directorate of Health the activity level in hospitals was normal in June, however somewhat below the normal activity level in July.

All together the services industries rose 0.8 percent in July. Activity was still 7.3 per cent lower than in February.

Production of other goods increased 1.1 per cent in July and caught up with the activity levels of February. Fisheries on the other hand were weaker than normal, especially for cod and haddock. The monthly growth was driven by electricity production, which has grown since February and is the main contributor for the high level of other goods production in July.

The activity in manufacturing and mining flattened in July. There was an upswing in the food products and pharmaceutical industry, while the production of metal goods fell. Manufacturing all together has fallen 8.6 per cent since February.

Production of crude oil and natural gas rose 0.9 per cent in July, according to estimates from the Norwegian Petroleum Directorate. Overall GDP, including oil extraction and ocean transport rose 1.1 per cent in July.

Consumption

Households’ total consumption grew 2.8 per cent in July. There was an increase both the consumption for goods and services. The total consumption in the households was 7.8 per cent lower in July than in February.

Consumption of goods rose 1.6 per cent in July and was 9.3 per cent higher than in February. The level in July was driven up by purchases of food and beverages, clothing, footwear furniture and household equipment, all of which has increased significantly since the pandemic outbreak.

Service consumption rose 2 per cent in July, with the largest contribution from restaurant and hotel services. The level of service consumption overall was nevertheless 15 per cent lower in July than in February, despite growth the past three months. This is due to the sharp decline in services related to culture and leisure service, restaurant and hotel services, and transport services in March and April. The consumption of leisure services was revised in June due to new information about travel agencies.

Final consumption expenditure of general government rose 1 per cent In July. 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 third quarter become available. These figures must therefore be regarded as preliminal.

Investments

Gross fixed capital formation rose 2.2 per cent in July after a 1 per cent decline in June. Households’ investments in housing remained relatively unchanged from June to July.

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.

Increased exports and imports

Exports of goods and services increased 5.6 per cent in July. The growth is mainly driven in crude oil exports and traditional goods. Both pharmaceutical products, refined oil products and farmed fish contributed. Exports of farmed salmon and trout fell sharply after the pandemic outbreak but with good growth in June and July, the level is now higher than in February.

Total imports grew 4.4 per cent, with imports of both traditional goods and services rising. The imports of services were driven by increased foreign consumption, due to easing on travel restrictions in June and July. The increase in goods imports is due, among other things, to increased car imports and high imports of parts for wind power production.

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.