Regional network reports 4-2007

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Region North

Summary

• All industries in Region North report growth in demand and output, and expect the growth to continue at approximately the same pace in the period ahead.
• Domestically oriented manufacturing is growing strongly as a result of a high level of activity in the construction and fish-farming industries. Export industry growth is solid, but many contacts in Region North report that enterprises do not have the capacity to meet the strong growth in market demand. Growth is expected to continue at approximately the same rate during the coming period.
• The building and construction industry reports a high level of activity and generally strong demand growth. Because they are operating at virtually full capacity, contacts are unable to translate the strong demand into a higher rate of production and activity. Solid growth is also expected during the next six months.
• Retail trade reports strong growth which is expected to continue at the same pace during the next six months. Strong growth is reported in all segments in this round.
• Growth continues in the service industry as well and, for corporate services, at an increasing pace compared with the previous round. Growth in household services remains unchanged. Growth in the next 6 months is expected to remain solid, and to be strongest in business services.
• In this round, 64 per cent of the contacts report that they would have some or considerable difficulty in accommodating expected or unexpected growth in demand. This is an increase on the previous round, when 58% of the contacts responded in this manner.
• Except in building and construction, employment growth is declining in all parts of the private sector in this round compared with the previous report. During the next three months, all sectors are expecting growth in employment, particularly manufacturing and the service sector. The share of contacts reporting the labour supply as a constraint is still highest in building and construction, followed by retail trade and the service industry.
• The projection for annual wage growth in 2007 is 4½ - 6%. Expectations are higher than during the same round of interviews last year, except in the service industry where they are at the same level.
• The year-on-year rise in prices is 4%. The rise in prices has edged up since the previous round due to a somewhat higher rise in prices in the services sector. 56 per cent of our contacts expect the rise in prices to remain stable in the next 12 months, while 6 per cent expect them to rise at a faster pace. The share expecting a higher rise in prices is lower than in the previous round.