Regional network reports 4-2007

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National Report

Summary

Demand, output and market outlook

Solid growth continues to be reported in all industries, but growth appears to have moderated compared with the previous round. The market outlook for the next six months indicates continued solid growth. Contacts expect a somewhat slower growth rate now compared with expectations in the previous round. A number of industries report that a scarcity of available capacity has been a constraint on growth and will limit opportunities for growth in the period ahead. Slower growth than in the previous round is reported among suppliers to the petroleum industry, domestically oriented manufacturing and the building and construction industry. In the export industry, retail trade and the service industries, growth appears to be gathering pace.

In domestically oriented manufacturing there is growth in many different industries, but generally solid growth among manufacturers of various types of building materials. Growth in the export industry is reported to be strongest for shipbuilding, engineering and other offshore-related industry. Growth among suppliers to the petroleum industry is reported in this round to be considerably weaker than earlier this year. This is due to a drop in activity after the large Ormen Lange and Snøhvit projects peaked simultaneously, but growth is expected to pick up again. The building and construction industry also reports lower growth in this round, but this is largely due to a shortage of labour. The reports indicate that there will be a decline in residential construction, but a rise in commercial construction in the period ahead. Retail trade reports stronger growth in this round. Sales of building materials continue to grow, and strong growth in the sale of cars, furniture and electronics is reported. The service industries report solid growth, and it is still strongest in corporate services. Growth in financial and business services remains solid, but growth is also reported for the hotel and transport industries. A substantial share of contacts report also here that a shortage of labour is a constraint on growth.

Capacity utilisation and supply of labour

61% of the contacts state that they would have difficulty in accommodating demand growth. This is approximately the same as in the two previous rounds, and indicates that the situation with respect to available capacity is now stable. Half of the contacts report that the supply of labour will limit any increase in production. Here, too, the situation is stable, and the tightening of the labour market appears to have come to a halt.

Employment and the labour market

Employment appears to be growing at the same pace as earlier this year. Growth in services is still strongest. Growth at the current pace is planned for the next three months, but many contacts say there is uncertainty in this respect because of problems with the labour supply.

Costs, prices and profitability

The annual wage growth estimate for the current year is 5½% as a weighted average. The estimate has increased by almost half a percentage point compared with the previous round, and is higher for all industries in this round. The estimate is more than one percentage point higher than at the same time last year. Building and construction and the service industry expect the highest wage growth.

Selling prices have exhibited solid growth in the past twelve months, and the rise in prices appears to be gathering pace. Growth appears to be strongest in building and construction and corporate services. Fewer than earlier this year believe that prices will continue to rise. In this round, 22% of contacts expect a stronger rise in prices in the coming 12 months, while 32% believe prices will rise more slowly. There are most contacts expecting stronger growth in retail trade, and fewest in building and construction. The largest change compared with earlier this year is in building and construction, where considerably more contacts expect the rise in prices to moderate.

Profitability is growing in all industries, but growth is reported to be slower than earlier this year. Growth is strongest among suppliers to the petroleum industry, while developments are weakest in retail trade and the export industry.