Norwegian industrial managers see prices continuing to rise - and point to weaker krone

The Purchasing Managers’ Index (PMI) fell significantly in August, but is likely to be from “exaggerated” levels in July. – Indicates that activity is improving somewhat.

Photo: Ole Berg Rusten/NTB

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The Norwegian Industry Purchasing Managers’ Index (PMI) fell by 4.9 points to 51.4 points in August, according to DNB and the Norwegian Purchasing and Logistics Association (NIMA), which are responsible for the survey.

The decline follows an unusually strong rise in the previous month, which was interpreted as uncertain due to poor responses during the holidays.

– This indicates that industrial activity increased in August. Admittedly, the index is down 4.9 points from July, but the July PMI may have overestimated the activity, said the DNB/NIMA press release.

This is the PMI

Purchasing Managers Index (PMI) stands for “Purchasing Managers Index”. The Purchasing Managers’ Index (PMI) is prepared every month in more than 40 countries. It measures the flow of goods and mood among purchasing managers and is considered an important indicator of economic development.
The numbers can affect exchange rates, interest rates, and stock markets.
Values above 50 indicate increased activity or growth. Values less than 50 can be an expression of regression.
The index consists of five sub-indicators: quantity of demand, production, employment, delivery time and stock of purchased goods.
The Norwegian Purchasing Managers’ Index (PMI) is compiled by NIMA – The Norwegian Association of Purchasing and Logistics and DNB.

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Some improvement

With a response rate of 60 companies, the sample is still small, so Chief Economist Kerry Amdahl at DNB Markets is unsure how representative the survey is.

– The July numbers may have been characterized by a very small sample, which is a poor basis for comparison, he tells E24.

– What can we explain from today’s numbers?

The PMI indicates that manufacturing activity is improving somewhat after a slightly weak development before the summer, says Amdahl.

In May and June, the aggregate index was less than 50, which is an indication of lower production.

Some improvement: Chief economist Kerry Amdahl at DNB Markets says the survey points to some improvement in manufacturing activity after a slightly weak development before the summer. — Photo: Cecily S Andersen/E24

Indicates continued price growth

Amdahl notes that the index of prices for purchased goods has fallen, but is still well above 50.

This indicates that prices will continue to rise, although not as strongly as before. Among others, the participants highlighted the effects of A Weak crown And price increase On some food / agricultural products, he says.

The price index for goods purchased was 56.9 in August. It is lower than in the first half of the year, but indicates continued growth.

The value of the krone fluctuated a lot throughout the summer, but remains at historically weak levels. Now the price of one euro is 15 per cent higher than it was at the same time last year, which makes it more expensive to import goods.

On the other hand, the employment index increased significantly to nearly 53 points. So far, the rise in interest rates in the wake of higher inflation has not led to any specific increase in unemployment. However, Norges Bank expects the tightening to lead to higher unemployment over time.