SpareBank 1 SR-Bank’s business survey: Optimistic outlook
Feedback from 600 businesses in SR-Bank’s market area in South-West Norway, counties: Rogaland, Hordaland and Agder.
The September edition of SpareBank 1 SR-Bank’s business survey confirms a steady optimism in the region. The main index has risen from 59 % to 60 % (constructed as a PMI and 50% is neutral). This implies that there is a clear majority of companies expecting growth the coming year.
All sub-indexes indicate an increase, with high expectations in turnover, employment and order backlog. The negative drag from lower oil price and oil-related activity seems to be behind us.
Companies with high oil exposure have had very challenging times. Now this is changing Oil-exposed companies expect growth in the coming 12 months (main index of 66 %). For the first time since 2014 the companies with high oil exposure are more positive than companies without oil exposure.
Rogaland county has the highest oil exposure. Improvement among companies with high oil-related turnover contributed to a marked boost for Rogaland this spring. Businesses in Rogaland now seems to have adjusted to an oil price of around USD 50 per barrel.
Agder and Hordaland counties also have oil-related businesses, but these counties are more diversified with a larger proportion of business sectors benefiting from weak foreign exchange rate (seafood, traditional exports and tourism). The outlook is now positive in the counties Rogaland, Hordaland and Agder (60 %).
Reduced employment rate
This spring the businesses employment plans improved. The outlook is now positive and 59 % of the companies expect to increase employment. This indicates reduced employment rate the coming 12 months. We expect the employment rate to drop towards 3,0 % in Rogaland and 2,5 % in Hordaland and Vest-Agder.
Some of the indicators in the survey may shed extra light on turning points in the business cycle. The order reserve index remains at a solid level (near 60 %). A majority of companies are thus expecting increased order reserves. Businesses also expect improved profitability (62 %).
This reflects that companies’ efforts to reduce cost, increase efficiency and improve profitability are expected to yield results.