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Report from Region Inland

Summary

• On the whole, Region Inland reports solid growth in demand and production. Growth has declined somewhat in the export industry and corporate services, whereas it has increased in retail trade.
• Growth in manufacturing is generally solid, particularly in manufacturing for the domestic market. The food industry is experiencing increased demand for ready meals. Suppliers to the building industry report strong demand, but capacity and labour constraints are curbing growth.
• Building and construction report continued solid growth, with activity slightly on the rise this round. The growth pace of commercial construction is higher than that of residential construction.
• Growth in retail trade is judged to be appreciably stronger than in the previous round. Rising sales of building materials, sports articles, textiles and toys and gift articles contributed to solid growth in this round.
• Growth in services is roughly in line with previous rounds. Growth is solid to strong in commercial and financial services, tourism and the restaurant business.
• The outlook for the next 6 months implies approximately unchanged growth and relatively similar growth prospects for most industries.
• The investment level is stable in manufacturing and the local government sector, slightly falling in services, and rising in retail trade.
• 51% of companies report in this round that they would have some or considerable difficulty in accommodating an expected or unexpected increase in demand, while 33% report that the supply of labour would limit output growth if demand increased.
• Employment has risen in the past 3 months, particularly in manufacturing. Increased employment is expected in all parts of the private sector in the period ahead. The fact that a number of companies explicitly make reservations about being able to secure personnel with the necessary qualifications is a measure of labour supply constraints.
• As in the previous round, estimated wage growth is 4%-4.5%, which is appreciably more than reported in the same round in 2006. The estimate for wage growth has risen since the previous round in manufacturing and local government.
• Price inflation has climbed in most industries, and is 6-8% for domestically oriented manufacturing, services and building and construction. The export industry reports a slower rise in prices than in the previous round.
• On balance, expectations indicate stable price inflation for the next 12 months. Prices in building and construction and other services are expected to continue rising strongly.
• Profitability has improved in all industries. The increase in profitability, and the change since the previous round, are most pronounced for retail trade because of increased volume and improved margins.