| Interview round: |
4-2005 |
| Interview period: |
August - September 2005 |
Summary
Demand, output and market outlook
All industries report growth in demand and output during the last round. The growth rate for domestically oriented manufacturing and the export industry, excluding petroleum-related activities, has been somewhat lower during the last three months than in the previous period. Manufacturing supplying goods to the household sector and the construction industry reports solid growth. The textile industry is struggling and developments in the engineering industry in Region North are marked by reduced activity. In the export industry, there is growth in the technology industry and in the fishing and fish farming industry. The signals from the process industry are somewhat more mixed and we anticipate problems ahead for parts of our energy-intensive manufacturing due to high energy prices. Suppliers to the petroleum industry have experienced strong growth as a result of high oil prices and robust petroleum sector investment. Building and construction report a somewhat lower growth rate than in the last period, and a couple of regions have signalled that the residential housing market is becoming saturated. Growth in activity in service industries is at the same level as during the last round, whereas growth has been somewhat stronger for retail trade.
The market outlook is positive. Reports from the company managers interviewed indicate that growth will be at least as strong six months ahead as the current level. Retail trade is the only sector where market expectations are slightly lower now than in the last round. The somewhat more pessimistic tone perceived in the last round of interviews in the export industry appears to have been short-lived, but the uncertainty surrounding these assessments is considerable.
Capacity utilisation and investment plans
Forty-five per cent of the companies report that they would have some or considerable (11 per cent) problems in accommodating an increase in demand. Comparable figures for the last round were 39 and 14 per cent respectively. The figures show that capacity utilisation is increasing gradually, driven by a broad economic upturn. Parts of petroleum-related activities and the building and construction sector are experiencing capacity problems, but so far, the pressure on factors of production does not seem to be particularly large in the other industries. All industries report plans for moderate to solid growth in investment. Investment growth has been strongest in retail trade and manufacturing. In manufacturing, investment growth has gathered pace since the spring. However, investment growth in the service industries and the public sector has slowed slightly compared with the last round.
Employment and labour market
Employment is also increasing in the entire private sector, in pace with the economic upturn. Figures from this round show that employment growth in construction and retail trade has been somewhat stronger in the last three months, whereas growth has slowed slightly in manufacturing and the service sector. It appears that the positive developments in the private sector will continue during the next three months. It also appears that growth may accelerate somewhat in manufacturing and fall slightly in the rest of the private sector. Employment in the local government and hospital sectors is stable.
Twenty-four per cent of the contacts report that the supply of labour will be a constraint on activity if demand increases. This is in line with the findings in the last round. There is a shortage of qualified labour in building and construction and parts of petroleum-related industries, but otherwise there does not appear to be particularly large pressures on this factor of production nationwide.
Costs, prices and profitability
The general picture is that wage developments are stable. In general, wage pressures appear to be subdued now. Some companies have already incorporated the occupational pension scheme in wage determination. The average projection for annual wage growth in 2005 is 3.5 per cent this round, 0.1 percentage point higher than the last round. There is some growth in annual wages in the other sectors, with the exception of the local government and the hospital sector. The projection in this round is nearly the same as the projection at this time last year.
The companies contacted report a moderate rise in selling prices during the last year in manufacturing, retail trade and other service industries. Developments are favourable for building and construction. The growth rate for domestically oriented manufacturing and the export industry has slowed slightly compared with the previous round. On the other hand, the growth rate is somewhat stronger in building and construction, retail trade and service industries. Fewer companies expect that prices will rise at a faster pace in the next 12 months than in the previous round.
Increased demand, a rise in selling prices and generally low wage pressures are contributing to improving profitability in all industries again in this round. Companies are also making continuous efforts to curb costs in order to strengthen their financial situation.