Regional network reports 4-2007

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Region East

Summary

• Solid growth continues in Region East. All industries report solid growth with the exception of the building and construction sector which has not seen growth for the past three months. Growth is expected to remain solid in the period ahead.
• Manufacturing activity remains solid. Our contacts in both domestically-oriented manufacturing and the export industry report increased production during the past three months. Growth is somewhat stronger in the export industry than in domestically oriented manufacturing.
• Production in building and construction is at an extremely high level, and the sector does not appear to be exhibiting growth any longer. The impression given is that it is not demand, but the willingness and ability to grow that is a constraint on further growth.
• Growth in retail trade remains solid, and is strongest for electrical items, cars and sports equipment.
• The service sector, especially corporate services, reports solid growth. As previously, the strongest growth has been exhibited by business services.
• 50% of the companies report that they would have difficulty in accommodating expected or unexpected growth in demand. This is lower than in the previous round, but approximately the same as in the two rounds before that. Problems are still greatest in the building and construction sector and services.
• Employment have increased in all industries during the past three months. Compared with the previous round, growth has been stronger in services, retail trade and the public sector, but weaker in manufacturing and building and construction. Growth has been strongest in services. During the next three months, growth is expected to take place at roughly the same pace as during the past three months.
• Overall, annual wage growth in 2007 is estimated by contacts to be just under 5¾% in this round, more than ½ percentage point higher than in the previous round. Manufacturing in particular, and to some extent services and the public sector, expect higher wage growth than in the previous round.
• The rise in selling prices is the next highest recorded in the region. However, it is declining somewhat from the peak in the previous round. It is primarily manufacturing and household services that report a weaker price rise. Corporate services are the only sector reporting a stronger rise in prices. A moderately lower increase in prices is expected in the period ahead.