GDP for Mainland Norway flattened out through Q2
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Gross domestic product (GDP) for Mainland Norway fell 0.4 and 0.1 per cent in April and May, respectively, but increased 0.3 per cent in June. Nevertheless, GDP for Mainland Norway increased 0.7 per cent in the second quarter, which must be seen in connection with the low level of activity in January and February.
"The modest development from March to June is mainly due to a decline in wholesale and retail trade, which masks an increase in several other service industries," says Head of National Accounts, PÃ¥l Sletten.
Although GDP for Mainland Norway flattened out, the strong growth in employment continued. The number of employed persons increased 0.6 per cent in the second quarter. Overall, employment has increased by 40 400 people in the first half of the year.
"Since the second half of 2021, prices have increased sharply, particularly on energy goods and raw materials imported from abroad and have gradually spread to the prices of other goods and services," says Sletten.
Increasing prices on inputs increases costs for business. The price increase on products sold by businesses has nevertheless been sufficient for high operating surpluses throughout the first half of 2022, also outside the energy industries.
Households experienced strong cost growth in the second quarter. The prices of electricity and fuel, but also food, rose sharply.
"Increased prices reduces households' purchasing power, which contributes to dampening consumption growth," says Sletten.
The service industries, including dwelling services, rose 1.3 per cent in the second quarter. The industries that have previously been hit hard by the pandemic contributed most to the upswing in the second quarter, particularly accommodation and food service activities. Meanwhile, wholesale and retail trade fell and dampened the rise.
Other goods production, which includes the primary industries, electricity production and construction, fell 0.6 per cent. The decline was particularly driven by aquaculture, while fishing increased and dampened the decline. The quarter was characterized by large monthly fluctuations in the volatile fishing and electricity industries.
Value added in the power industry rose 0.5 per cent in the second quarter but was 5.4 per cent lower than the same period last year. It must be seen in connection with the low levels in the water reservoirs.
At the same time, electricity prices continued to rise, and value added in the power industries grew just under 12 per cent from the first to the second quarter, measured in current prices.
Activity in manufacturing and mining fell 0.9 per cent, thus falling for the third quarter in a row. The industry has had challenges linked to shortages and high prices of inputs, which were exacerbated by the war in Ukraine.
The wood and wood products industry contributed the most to the decline in the second quarter. Petroleum refining and production of chemical raw materials also reduced overall activity.
Value added in general government rose 1.0 per cent in the second quarter. Central government grew by 1.8 percent, due to increased activity in the hospitals. Activity in local government increased 0.3 per cent. Care services, kindergartens, after-school care and education made up the largest contributions.
Crude oil and gas extraction increased 0.9 per cent during the second quarter. As a result, GDP including oil and gas extraction, pipeline transport and foreign shipping increased 0.7 per cent. Measured in current prices, total GDP was 30.7 per cent higher in the second quarter of 2022 compared to the same quarter last year.
Total household consumption increased 0.5 per cent in June and increased overall by 3.2 per cent in the second quarter. Increased prices have reduced households’ purchasing power, and in June the consumer price index (CPI) rose by as much as 6.3 per cent compared to the same month the previous year.
Service consumption grew 3.3 per cent and was particularly boosted by accommodation and food service activities as well as recreational and cultural services as well as passenger transport. Goods consumption declined 0.1 per cent and was particularly driven by the decline in food consumption as a result of increased restaurant visits and border trade.
Consumption abroad increased 42.2 per cent in the second quarter but is still at a lower level than before the pandemic. Foreigners’ consumption in Norway rose 9.6 per cent.
Total consumption in general government increased 0.2 percent in the second quarter. Consumption in central government increased 1.1 percent, while in the local government it increased 0.6 percent.
Gross investments for mainland Norway fell 2.9 per cent in the second quarter. Other services fell 5.1 per cent and contributed the most to the decline. Investments in other goods production and dwelling services also contributed to reducing total investments.
On the other hand, investments in manufacturing and mining dampened the decline. Investments in dwelling services decreased 3.8 per cent from the first to the second quarter.
The seasonally adjusted volume growth in exports increased 0.9 per cent in the second quarter. Exports of services, ships, platforms and aircrafts increased, while there was a decline in traditional goods as well as crude oil and natural gas.
Measured in current prices, exports were 78 per cent higher in the second quarter compared to the previous year.
Total imports increased 4.3 per cent from the first to the second quarter. Especially imports of services and traditional goods contributed to the growth. Imports of ships, platforms and planes decreased, thus dampening the upswing.
Employment increased 0.6 per cent in the second quarter, adjusted for normal seasonal variation. There was a broad rise in employment in most industries. Accommodation and food service activities was the largest contributor.
There was a decline in the number of people employed in wholesale and retail trade, which dampened the growth. At the same time, unemployment fell sharply, and new groups are drawn into the labor market.
The number of hours worked rose 1.3 per cent from the first to the second quarter. Wage growth was 2.3 per cent in the second quarter compared to the previous quarter. ■