Norway: Industrial production contracts for first time in six months
June 6, 2014
In April, industrial output fell 0.1% over the previous month in seasonally-adjusted terms. The contraction contrasted the revised 2.1% increase tallied in March (previously reported: +2.3% month-on-month) and marked the first decline in output since October 2013. According to Statistics Norway, April’s slight decrease mainly reflected a contraction in oil and gas extraction, which more than offset faster growth in electricity, gas and steam. Meanwhile, manufacturing output was unchanged in April.
On an annual basis, industrial production expanded 3.2% in working-day adjusted terms in April. The increase was well below the 7.1% expansion observed in March. Despite the slowdown tallied in April, the trend continued to improve, with annual average growth in industrial production rising from minus 1.3% in March to minus 0.6% in April, which represented the highest level since March 2013.
Industrial production in Norway is highly affected by oil and gas extraction; the category accounts for around 72.0% of the index. According to the Ministry of Petroleum and Energy, oil and gas production reached a peak in 2001 and has been declining ever since. While the government encourages operators to increase the recovery rates from oil and gas fields, the attempts have been undermined by increases in costs and taxes, which have thus dragged down overall industry output.