National Report for Regional Network

Summary

All industries report growth in demand and output during the period. Suppliers to the petroleum industry report particularly strong growth. Domestically-oriented manufacturing in all regions report continued solid growth in demand and output. This growth in demand is due to strong household purchasing power, buoyant activity in building and construction, as well as positive developments in the fishing industry, fish farming and the shipbuilding industry. The export industry reports solid growth overall. The fish farming industry reports strong growth in demand from the EU and Russia. Suppliers of ships'gear and the pharmaceutical industry also report strong growth. There is solid growth in the engineering industry. The ferroalloys industry has reduced production capacity compared with the previous period due to intense competition from China and Russia. Suppliers to the petroleum industry report continued strong growth. This is due to a high level of both investment and exploration activity. Building and construction report continued solid growth. There is increased activity in the areas of new buildings and home refurbishment, private and public non-residential buildings and construction. Growth in corporate services has on the whole been solid during the period. There are variations from one region to another. Region South reports strong growth whereas growth in Region North has been moderate. Household services report solid growth on the whole during the period. Region North is an exception, with moderate growth. Retail trade reports solid growth during the period.

The market outlook is positive. Suppliers to the petroleum industry are expecting solid growth. Overall, growth is expected to be somewhat weaker during the next six months than what we have seen in the last three months.

Capacity utilisation and investment plans

49% of the companies report that they would have some or considerable problems in accommodating an increase in demand compared with 43% in the previous round. Capacity problems are still most pronounced in building and construction and parts of petroleum-related industry. Compared with the previous round, the share of companies reporting that they would have considerable problems accommodating an increase in demand is approximately the same. Capacity utilisation is highest in Region North-West and lowest in Region Inland.

All industries report moderate to solid growth in investment plans, with the exception of retail trade where investment plans are virtually the same. Manufacturing and the local government and hospital sectors are expecting the strongest growth. In Regions South, North-West, Central Norway and Region North, all industries report an increase in investment.

Employment and labour market

The high activity level has contributed to a moderate increase in overall employment again during the period. Employment growth is expected to remain at about the same level during the next three months. A number of the regions report labour market tightening. Building and construction report the strongest growth, whereas employment growth in the local government and hospital sectors and retail trade has remained virtually unchanged. The positive developments in the private sector are expected to continue during the next three months. Growth in manufacturing employment is expected to show the largest increase compared with the previous round.

34% of the contacts report that labour will impose a constraint on activity if demand increases. This is an increase of 6 percentage points compared with the previous round and confirms labour market tightening. The shortage of skilled labour is still most pronounced in building and construction and petroleum-related industry, although parts of the service sector also report problems recruiting qualified labour. Labour shortages are still most pronounced in Regions North-West and South-West.

Costs, prices and profitability

On average, selling prices have increased moderately during the last 12 months. All sectors report a rise in prices. There has been a moderate increase in selling prices in manufacturing. In the export industry, the rise in prices has been adjusted downwards compared with the previous round of interviews. Building and construction report a solid rise in prices in the last 12 months. Prices have increased most in this sector. Retail trade reports a weak rise in prices overall following reports of a price fall in the previous round. Service industries report a moderate rise in prices on the whole. 24% of the contacts expect prices to rise at a faster pace in the next 12 months. This is a reduction of 2 percentage points since the previous round. 55% expect prices to remain unchanged and 21% expect prices to fall. Domestically-oriented manufacturing is the only sector where a larger number of contacts expect prices to rise at a faster pace.

Some increase in selling prices combined with increased demand is contributing to a solid improvement in profitability for most sectors. In Region South, there is solid to strong growth in profitability in all sectors. The petroleum-related industry stands out again in this round with a very positive improvement in profitability. Retail trade also reports solid profitability growth. Building and construction is the only sector where profitability growth has slowed slightly compared with the previous round.