National Report for Regional network

Summary

Overall growth is solid in all industries and all regions. Growth is strongest in building and construction, service industries and suppliers to the petroleum industry. Domestically oriented manufacturing companies that are supplying goods to the business sector report solid growth. Suppliers of building materials, and packaging and office furniture manufacturers report continued growth in output, and in Northern Norway the shipbuilding industry reports growth. The feedback from the food industry is mixed, but there is growing demand for low-fat and low-sugar products. The export industry also reports continued solid growth. The fish farming industry, segments of the process industry, suppliers to the telecom industry and the shipbuilding industry all report growth. The signals from the process industry are mixed. High prices have resulted in growth for aluminium, iluminite and iron ore, while high energy prices have resulted in a reduction in ferrosilicon production. Along the coast up to Central Norway, suppliers to the petroleum industry report continued strong growth, stronger than in the previous round. As in the previous round, there is solid growth in building and construction. Residential construction activity is still high and there is solid growth in construction, commercial building and public building. Growth remains solid in retail trade. There is solid growth in sales of building materials, electronics and furniture, whereas growth in clothing and car sales is more moderate. The service sector, especially corporate services, report solid growth. Consulting services aimed at building and construction and the petroleum industry report strong growth, and widespread growth in the business sector is increasing the demand for hotels and services such as IT, auditing, lawyers and financial advice.

The market outlook is generally favourable. On the whole, growth is expected to remain solid during the next six months. Suppliers to the petroleum industry expect strong growth in the period ahead, while the other industries expect solid growth. Suppliers to the petroleum industry and building and construction expect lower growth in the period ahead than in the last period, whereas service industries expect the growth rate to increase.

Capacity utilisation and investment plans

49% of the contacts report that they would have some or considerable difficulties accommodating an increase in demand. This is the same percentage as in the previous round, but higher than in autumn 2005, and a larger number of contacts indicate that the labour supply is a constraint. Labour shortages are most pronounced in building and construction and service industries. All industries report moderate growth in investment plans, with the exception of the local government and hospital sectors, where investment growth is solid. The local government sector in particular reports increased investment.

Employment and labour market

There is no growth in employment in retail trade, but the other industries report moderate employment growth. Compared with the previous round, there is lower growth in employment in service industries and building and construction. Employment in the local government and hospital sectors has remained unchanged in the last year but appears to be increasing moderately now. All sectors expect moderate growth in employment in the next three months, with the exception of building and construction, which expects solid growth. 39% of the contacts report that the supply of labour will be a constraint if demand increases. This is a higher percentage than in the previous round. Labour shortages appear to be most pronounced in building and construction, although many sectors report that engineers in particular are difficult to find.

Costs, prices and profitability

Annual wage growth is expected to be between 3.5% and 4.5%. The highest wage growth is expected in service industries. Compared with the previous round, retail trade and service industries have adjusted expectations upwards, while building and construction have adjusted expectations downwards somewhat. Many contacts report expectations of strong wage growth for some groups.

All industries report that the rise in prices is the same as in the previous round. This means that prices continue to rise in building and construction, whereas prices are stable in the retail sector. The remaining industries report a moderate rise in prices. All industries, with the exception of household services, expect a higher rise in prices in the next 12 months than in the previous 12 months. Only retail trade and household services expect a lower rise in prices now than in the previous round. The greatest change is reported by corporate services where a larger number of contacts expect a higher rise in prices during the next 12 months than in the previous rounds.

Profitability is improving in all industries. The offshore industry stands out with strong profitability growth. Domestically oriented manufacturing and building and construction report moderate growth in profitability compared with solid growth in the previous round. Contacts in the export industry and the service sector report solid growth in profitability.