National Report
| Interview round: | 2-2007 |
| Interview period: | March 2007
|
Summary
Demand and output
All industries report solid growth. On the whole, growth is at the same level as in the previous round. Expectations for the next six months are positive. However, most industries also report that labour shortages are limiting the possibility of further growth.
Compared with the previous round, growth is slowing somewhat among suppliers to the petroleum industry and the export industry, whereas growth is picking up for domestically oriented manufacturing, building and construction and corporate services. In domestically oriented manufacturing, producers of building materials report the strongest growth.
Within the export industry, there is continued growth in the metals industry, engineering industry, fish farming and the fish processing industry as well as some segments of the technology industry. Suppliers to the petroleum industry report strong growth in ship services and machine and equipment deliveries. Some shipyards also report strong growth due to the shipping industry's renewal of its offshore supply fleet. In this round, however, suppliers to the petroleum industry report the lowest growth since the beginning of 2005. Building and construction report shortages of labour and some types of building materials. These shortages have an impact on the real increase in activity resulting from increased demand. Commercial building and construction report continued solid growth, whereas residential construction will probably slow or stabilise. In the retail trade sector, growth in sales is strongest for building materials, brown and white goods, office machines and cars. In the service sector, commercial and financial services in particular are pushing up growth.
Capacity utilisation and supply of labour
62% of companies report that they would have some or considerable difficulty in accommodating an expected or unexpected increase in demand, while 53% report that the supply of labour would limit output growth if demand increased. These shares are higher than in the previous round, but approximately the same as in the autumn of 2006. As in previous rounds, building and construction, where labour shortages are most pronounced, report the highest capacity utilisation.
Employment and the labour market
Employment has increased in the last three months at approximately the same pace as in the previous round. However, employment growth is somewhat weaker now than in the last rounds in 2006. Employment in the service sector has increased most. Employment growth is expected to continue in the next three months, but at a somewhat slower pace. A number of industries report that an increase in employment is conditional on the supply of labour.
Costs, prices and profitability
Estimated annual wage growth this year is 4¾% as a weighted average, compared with 4½% in the previous round. This is considerably higher than the estimate for 2006 made at the same time last year. As in the previous round, a number of contacts express concern that wage growth may be higher than budget. Building and construction and the service sector expect the highest wage growth.
There has been a solid rise in selling prices during the past 12 months, the sharpest rise we have registered so far in the network. Building and construction, corporate services and domestically oriented manufacturing report the sharpest rise in prices. In the next 12 months, 33% of our contacts expect prices to rise at a faster pace, 45% expect prices to rise at the same pace, while 22% expect prices to rise at a slower pace. The share expecting prices to rise at a faster pace is highest in building and construction, domestically oriented manufacturing and household services. The export industry is the only industry where a majority of contacts expect a slower rise in prices.
Profitability has improved in most industries compared with the same period last year. Suppliers to the petroleum industry report the greatest improvement, but profitability has also increased considerably in other manufacturing sectors and the service sector. The picture is the same as during the previous round.