Norway PMI Falls to Five-Year Low as Orders Drop

The Norwegian manufacturing sector has entered a sharp contraction, with the latest Purchasing Managers’ Index (PMI) data revealing a stark downturn. The seasonally adjusted PMI for April 2025 plummeted to 46.1, marking the lowest reading since July 2020 and signaling the first contraction since June 2024. This decline, driven by collapsing new orders and global trade headwinds, has sparked concerns about the resilience of Norway’s export-reliant economy.

The Numbers Tell a Troubling Story

The April PMI drop was fueled by a 38.2 reading for new orders, a precipitous decline from March’s 47.4 and the weakest level since the series began. Production volumes also collapsed, falling to 46.5, while export orders weakened further amid global trade tensions. Even employment, which had been a bright spot, slowed to 53.0, though it remained positive.

Input costs, though easing slightly to 57.3, remain elevated due to tariff-driven price hikes and supply chain bottlenecks. Meanwhile, businesses accumulated inventories at a faster pace (54.9), suggesting caution in the face of uncertain demand.

What’s Driving the Decline?

1. Global Trade Tensions: Norway’s export-dependent industries—key to its manufacturing sector—are reeling from U.S.-led tariff policies and protectionism. Analysts at S&P Global noted that global export orders fell to a 20-month low, with North American markets, a major trade partner for Norway, experiencing the sharpest declines.
2. Domestic Demand Weakness: Domestic orders collapsed to 44.8 in March, exacerbating the contraction.
3. Supply Chain Pressures: Delivery times lengthened to 52.6, reflecting logistical challenges.

Sectoral Impact: Who’s Struggling?

• Export-Heavy Sectors: Industries like machinery, chemicals, and oil-related manufacturing face the brunt of trade disruptions.
• Input Cost Squeeze: Firms reliant on materials like timber and steel are grappling with persistent inflation, even as input prices moderated in April.

The Global Context

Norway’s downturn mirrors a broader global slowdown. The global manufacturing PMI dipped to 49.8 in April, its first contraction in 2025. Analysts warn that rising tariffs and inflation could delay recovery, with Norway’s export-reliant model particularly vulnerable.

Outlook: Recovery or Lingering Weakness?

While the PMI is projected to rebound to 51.4 by the end of Q2, optimism is tempered. Trading Economics forecasts suggest a gradual recovery to 53.0 by 2026, but risks remain:
- Trade Policy Uncertainty: Ongoing tariff disputes could prolong demand weakness.
- Inflation Lingering: Input costs, though easing, remain elevated.
- Inventory Risks: Overstocked inventories may lead to discounts if demand doesn’t rebound.

Implications for Investors

• Short-Term Caution: The April data suggests a challenging Q2 for Norwegian manufacturers, particularly exporters.
• Long-Term Opportunities: Firms with diversified supply chains or exposure to tariff-resilient sectors (e.g., renewable energy equipment) may outperform.

Conclusion

Norway’s manufacturing sector faces a critical juncture. The April PMI’s five-year low underscores vulnerabilities tied to global trade tensions, domestic demand weakness, and persistent cost pressures. While a partial recovery by Q2’s end is anticipated, investors should remain wary of lingering risks. The path to stabilization hinges on resolving trade disputes, stabilizing export demand, and managing inflation—a tall order in today’s volatile economic landscape.

For now, Norway’s manufacturing story is one of caution, with the sector’s health closely tied to global trade dynamics and policy outcomes.

Data sources: DNB Markets, NIMA Logistics Association, S&P Global Market Intelligence.