Regional network reports 4-2007

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Region Inland

Summary

• On the whole, Region Inland reports solid growth in demand and production. Growth has declined in manufacturing but has picked up somewhat in retail trade.
• Growth in domestically oriented manufacturing is reported in this round to have declined. The main reason is reports from manufacturers of building materials of a levelling off and in some cases a decline in sales. The export industry reports a slight decline in volume, largely due to increased demand in the Norwegian market.
• Activity continues to increase in building and construction, but growth is moderating. Growth is increasing in the commercial building sector, e.g. buildings for retail trade, the public sector and tourism, whereas residential construction is levelling off.
• Retail trade estimates that growth is somewhat stronger than in the previous round. Increased sales of cars and building materials are contributing to the growth.
• All sectors of the service industry report solid growth, broadly in line with previous rounds. Growth is solid to strong in business and financial services and transport. Some tourism segments also report solid growth this year.
• The outlook for the next 6 months indicates continued growth in most industries. Manufacturing growth is expected to level off, due in part to expectations of weaker growth in building and construction and uncertainty regarding export market developments.
• The level of investment is rising in manufacturing, but falling in retail trade.
• The labour market has become even tighter. 56% of companies report in this round that they would have some or considerable difficulty in accommodating an expected or unexpected increase in demand, while 45% report that the supply of labour would limit output growth if demand increased. In the previous round, the percentages were 58% and 38% respectively.
• Employment has increased in the past three months, particularly in the service industry. Expectations of employment growth in the period ahead are related in particular to this sector. The fact that a number of companies' explicitly make reservations about being able to secure personnel with the necessary qualifications is an indication of labour supply constraints.
• The estimate for annual wage growth has risen substantially in this round, and now lies at 5-6%, which is also somewhat higher than in the same round in 2006. Wage growth is strongest in business services and building and construction.
• As in the previous round, the rise in selling prices is solid. The rise in prices in manufacturing has declined compared with the previous round.
• Overall, expectations indicate a somewhat slower rise in prices during the next 12 months. One important reason is the strong rise in prices in building materials and building in the past year, combined with expectations of a slightly falling market. Some service segments expect a stronger rise in prices due to higher wage growth.
• Profitability is increasing in services and retail trade, while remaining stable in manufacturing.