Sustained growth in Norwegian economy
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The recovery of the Norwegian economy continued, employment rose, and increased prices on Norwegian exports gave a huge rise in the trade surplus.
Despite increased infection rates in September, the third quarter was mostly characterized by the gradual reopening and loosening of infection control measures. The recovery continued, and the economic activity increased in each of the quarter’s three months. In total, GDP for mainland Norway increased by 2,6 per cent measured in fixed prices and adjusted for seasonal variation.
"The growth in the third quarter is mainly due to service industries which have been hit hard during the pandemic," says Head of National Accounts, PÃ¥l Sletten.
The activity has risen strongly in accommodation and food service activities as well as arts, entertainments and other activities and transport services.
Meanwhile, there was also a huge increase in employment. Adjusted for seasonal variation, employment increased by 2,2 per cent in the third quarter, corresponding to 61 600 persons. Seasonal adjusted numbers show that the employment in the third quarter was on about the same level as the fourth quarter of 2019.
According to the statistic Number of employments and earnings, the number of non residential employees was far fewer in the third quarter than in the corresponding quarter of 2019.
"The recovery gave a fast transition in the Norwegian economy this summer. Companies increased their production fast, and employment rose quickly," says Sletten.
Consumer prices increased in the third quarter, also on goods that are important for Norwegian exports. The price on gas especially increased, but also prices on crude oil, metals and electricity. Oil and gas production increased, which lead to a very strong growth in Norwegian exports.
Norway’s trade surplus reached a total of 130 billion NOK measured in current prices in the third quarter and the figures for October suggests a further increase.
"The prices on much of Norway’s exports were high, but the most important reason for the increased trade surplus was the price of crude oil and especially gas, and that the production of these goods increased. This quarter illustrates the great importance extraction has for Norwegian trade balance," says Pål Sletten.
Strong increase in the service industries
The service industries that were hit the hardest during the pandemic contributed the most to the growth in the mainland economy during the third quarter. After the reopening started in the second quarter, the recovery in these industries have driven the growth in Mainland GDP.
In the industries where the gross product has been at the same level or higher than before the pandemic, the development has been more moderate.
It was especially accommodation and catering, cultural, as well as transport services which contributed to the activity in the third quarter. In total, the activity in the services industries increased by 3.6 per cent this quarter and contributed to increase Mainland GDP by 1.6 percentage points.
In the third quarter, the gross product in the service industries were for the first time larger than before the pandemic hit.
The industry aggregate other goods production, which includes the primary industries, electricity production and construction, increased by 1,0 per cent in the third quarter. Most of the growth is due to an unusually good mackerel fishing in August. Manufacturing fell in the third quarter, as a result of continued decline in the supplier industry.
Gross product in general government rose 2.2 per cent in the third quarter. Central government grew by 2.4 percent, mainly because of increased activity at the hospitals and public administration. Activity in local government grew by 2.0 per cent, due to increased activity in care services and kindergartens.
Crude oil and gas extraction increased sharply during the third quarter. As a result, GDP including oil and gas extraction, pipeline transport and foreign shipping increased 2.2 per cent from August to September.
In the third quarter, total GDP increased by 3.8 per cent compared to the previous quarter. Oil and gas prices continued to grow, which lead to total GDP increasing by 12.3 percent in current prices.
Consumption
Total household consumption increased by 1.1 percent in September, which gave a total growth of 5.4 per cent in the third quarter. Consumption of services increased by 8.6 percent in the third quarter and was mainly driven by accommodation and catering services.
Consumption of goods increased by 0.9 percent compared to the previous quarter. Car purchases, clothing and shoes contributed the most to the growth, while consumption of food and alcoholic beverages dampened the growth.
Total consumption in general government increased 1.3 percent in the third quarter. Consumption in central government increased by 1.9 percent, while in the local government it increased by 0.8 percent.
Investments
Gross investments for mainland Norway were almost unchanged from the previous quarter. Investments in general government increased about 12 percent. Other goods production declined 19.1 percent, the largest negative contribution on investments. Investments in dwelling services declined 5.7 percent in the third quarter.
Exports and imports
The seasonally adjusted volume growth in exports increased 6.5 percent compared to the previous quarter. Export of oil and gas increased 6.1 percent in the third quarter, the largest contribution to the growth. The export of services also contributed positively with a growth of 9.9 compared to the second quarter.
Total imports increased measured in constant prices mainly due to an increase in the import of services. After a decline the two previous quarters, imports of services increased 18.1 percent during the third quarter. Import of traditional goods, ships, platforms and planes also contributed to the growth in imports.
The Norwegian trade balance and trade surplus have been strengthened due to higher prices on oil and gas. Measured in current prices, the export was 73 percent higher compared to the same quarter last year.
Employment
The development in employment reflects the reopening of society. Employment in the third quarter was about the same level as before the pandemic. Aggregated employment increased 2.2 percent during the third quarter, adjusted for normal seasonal variations.
The largest contributions came from increased employment in accommodation and catering as well as cultural services. Among the group of non residential wage earners, one in three jobs are gone compared to the period pre corona.
The growth in mainland GDP is now estimated to be 2.0 percent from 2018 to 2019, and was previously estimated at 2.3 percent. ■