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Report from Region South

Summary

• All industries report solid growth. Manufacturing reports solid growth, a somewhat higher growth rate than registered in February, but in line with growth in the autumn of 2006. Growth in building and construction, retail trade and the service sector is solid and remains at the level prevailing during the last round of interviews.
• A majority of our contacts are expecting the same growth during the next six months. The market outlook is very favourable. Delivery time is longer in all sectors, however, and the labour market is tightening further.
• Manufacturing and service industries report a slight decline in planned investment. Among manufacturing companies, this is primarily because the investment level has been high for a longer period. Investment plans are reduced somewhat for this reason or because there is no longer a need for further investment. Investments remain high in the local government and hospital sectors.
• Capacity utilisation in Region South is roughly the same now as in the autumn and winter of 2006. 44% of the contacts report capacity problems. Compared with the feedback from the last round of interviews, a larger share currently report that labour shortages will be a constraint on output growth if demand increases.
• Employment has risen in the private sector. Employment growth has been most pronounced in building and construction, manufacturing and commercial services. In the local government sector, employment has risen slightly in the healthcare area.
• Annual wage growth is expected to be between 4% and 6%.
• Our contacts report a solid rise in selling prices, a somewhat higher rise than in the previous round. The increase is most pronounced for suppliers to the petroleum industry, wood products and the process industry as well as commercial services. During the next 12 months, 61% of our contacts expect prices to remain unchanged, while 33% expect prices to rise at a slower pace.