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Fast Comment NorwayManufacturing output: Strong production growth, driven by oil-supplying industries

  1. Manufacturing output increased further in May; well above expectations
  2. Particularly high activity in petroleum-related manufacturing
  3. Non-oil manufacturing sector slowing on the back on weaker global demand
Manufacturing output increased further in May, by 0.3 pecent m-o-m
Manufacturing output rose by 0.3 percent in May, following a rise of 2.5 percent in April. The outcome was well above expectations: we and consensus had expected a downward correction of 1 and 0.8 percent respectively. This strengthens the ongoing upward trend: relative to the previous, non-overlapping period, manufacturing output has risen by 0.8 percent. According to the press statement, the increase is particularly related to strong production growth in ships, boats and oil platforms. High activity among producers of oil platforms contributed to the rise. Overall, petroleum-related manufacturing saw a clear increase of 4.1 percent in the three-month period. The charts below highlight the two-speed manufacturing sector: a sharp acceleration among the oil-supplying industries, driven by rising petroleum investments, whereas the non-oil manufacturing sector has already slowed on the back of weaker global demand. As the impulse from investment activity on the Continental Shelf will fade from next year, we continue to expect considerably weaker manufacturing growth from 2020. But in the near term, momentum remains solid, supporting the case for a solid bounce in mainland GDP in Q2. Recall that the weak Q1 print (mainland GDP of 0.3 percent q-o-q) was primarily driven by a sharp decline in electricity transmission and temporary shutdowns among some large manufacturers.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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