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Region South

Summary

• The solid growth in Region South is broad-based. Domestically oriented manufacturing reports that the growth rate is somewhat higher than in March. Growth has slowed slightly in building and construction compared with the previous round.
• The business sector is flourishing and many companies have a substantial backlog of orders. Therefore, business leaders express considerable optimism and the outlook for the future is favourable. Growth is expected to remain solid in the period ahead.
• Both manufacturing and the service industry plan to reduce investment somewhat in the next twelve months compared with the investment level over the past year. Manufacturing companies report that this is primarily because investment has been high for an extended period and investment programmes have been extended as a result of longer delivery times from subcontractors. Some projects have been postponed because only a limited number of tenders have been received and prices have been high. Investment remains high in the local government and hospital sectors.
• An increasing number of enterprises report capacity problems in Region South. More than half of the contacts report capacity problems. A new element in this round is that capacity utilisation is increasing in retail trade and the service industry. Compared with the previous round, an increasingly higher share of these industries now reports that the supply of labour will be a constraint on production if demand increases.
• There has been solid growth in employment in building and construction, manufacturing and commercial services. Within the local government and hospital sector, employment has risen slightly in the healthcare sector.
• Annual wage growth is expected to be between 5% and 6%.
• Our contacts report a solid rise in selling prices. Building and construction, wood products and the process industry as well as commercial services report the sharpest rise in prices. 65% of our contacts expect price increases to remain stable during the next 12 months, while 19% expect a higher rise in prices.