Industrial Confidence Falls; Diverging Trends Across The Supply Chain

The Norwegian Q4 industrial confidence indicator fell to -4.9 in Q4, from a downwardly revised -2.5 in Q3 (from -2.2 prior). A similar decline was seen in the 3M average of the manufacturing PMI, which was 49.9 in the 3-months to December, compared to 51.9 in in the 3-months to September.

• The survey reported diverging trends across the supply chain, with producers of capital goods reporting a rise in production while intermediate consumer goods producers reporting a decline. Domestic and international new orders similarly fell for producers in the latter two groups.
• The release notes that capital goods is dominated by businesses in the oil supply industry, who saw clear production growth in Q4.
• The above trends drove employment prospects in the fourth quarter. While employment expanded overall (51.9 vs 52.4 prior), this was wholly driven by capital goods producers.
• With respect to prices, a large proportion of businesses reported growth in costs in Q4, which translated to continued product price growth in domestic and export markets - particularly for consumer goods.
• Looking ahead, the survey notes a negative outlook for Q1 '24 overall, though capital goods producers are optimistic. This is consistent with Norges Bank expectations for a -0.3% Q/Q fall in mainland GDP per its December MPR forecasts. Respondents expect prices of intermediate goods to continue rising in Q1, "but to a somewhat lesser extent than before".