Regional network summaries

Print

Region East

Interview round:  1-2007
Interview period: January and February 2007

Summary

• There is still solid growth in Region East, on a par with the previous round. The market outlook is positive, but our contacts expect overall growth to be somewhat slower in the period ahead.
• Manufacturing is still doing well in the region. In domestically-oriented manufacturing, suppliers to building and construction have had the strongest growth, as they have for a long period of time. Capacity constraints and more moderate expectations in building and construction contribute to our contacts expectations of slower growth in the period ahead. In the export industry, the technology industry and suppliers to the offshore sector in particular report strong growth.
• In building and construction, there was moderate growth in the previous period, and it is mainly capacity that is constraining growth. Demand is still strong. In the period ahead, it would appear that growth in housing construction will slow down, while growth in construction and commercial building activity will pick up.
• In retail trade, there is solid growth in consumer goods such as clothing, furniture and electrical goods. There has been a weaker development for sports equipment as a result of the lack of snow at the outset of the winter.
• Corporate services report strong growth during the previous period. Business services, finance and transport in particular have contributed to the strong growth. There is also solid growth in household services, such as telecommunications and the hotel and restaurant industry. There are very few signs of a slowdown.
• 55 per cent of the companies will have problems in this round meeting expected and/or unexpected growth in demand. That is a decline from November, but still considerably higher than reported in the other rounds last year. There are still reports of problems hiring sufficient manpower, especially in building and construction and in the service sector.
• Employment has increased in the service sector, building and construction and the local government sector in the previous 3 months, but at a somewhat slower rate than previously. It would appear that growth in employment has peaked. In the period ahead, there are plans for further increases in the service sector and building and construction, but no change in the other sectors.
• Estimated annual wage growth this year is about 5 per cent. This is approximately equal to estimated annual wage growth for 2006 reported in November. However, there is always great uncertainty associated with estimatesestimtes for wage growth so early in the year.
• In the previous 12 months, prices have increased at the same rate as in the previous round. It is especially building and construction, manufacturing and corporate services that have had a solid rise in prices in the previous year. In the next 12 months, 45 per cent of our contacts expect unchanged price rises, 40 per cent expect higher price rises, and about 15 per cent expect lower price rises. The percentage that expect higher price rises is higher than in the previous round. Compared with the previous round, more of our contacts expect higher price rises in corporate services and in retail trade.