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Report from Region South-West - October 2003

Region: South-West
Interview round: 5-2003
Interview period: October 2003

Summary

  • The general impression from the interviews is that the downturn reached its trough in early summer 2003.
  • An improvement is already evident in some sectors, particularly retail trade (groceries, white goods and electronic goods).
  • In general, the business sector is showing nascent, cautious optimism. Enterprises are, however, holding back investments and recruitment due to uncertainty and a substantial aversion to risk. Income is to be increased before investments are made to expand capacity.
  • The construction sector, which expected a lean second half of the year, is now far more optimistic. DIY-shops have already felt the impact of the increase in home refurbishing. The decline in housing construction also seems to have come to a halt.
  • Output is increasing in the export industry, and foreign owners of well-established companies are choosing to invest in Norway rather than other countries. We take this as an indication that the assessment of Norway as an industrial country is more positive now than it was in winter/spring.
  • Most enterprises report stable employment following extensive measures to rationalise and restructure organisations and firms. The petroleum industry is still downsizing, while the number employed in retail trade is increasing.
  • The trend in the petroleum and subcontracting sectors is stable or slightly declining, and this trend is expected to continue in 2004. Investment is likely to increase, but the share of domestic investment will probably be reduced, partly because of intensified foreign competition and partly because of the nature of the investments. The industry is expecting expansion in the Barents Sea area and changes in the tax regime. The Norwegian tax regime is favourable (relative to other countries) when oil prices are low, but unfavourable when oil prices are high.
  • All industries still report a labour market overflowing with well-qualified labour. The supply of labour is particularly plentiful for larger undertakings because these employers are perceived as offering less insecure employment in the current labour market.
  • Operating margins, declining in all sectors this spring, are now showing a slightly upward tendency.
  • The decline in interest rates is having a positive impact on capital-intensive enterprises and sectors, but has so far not affected the level of investment. Investment programmes are, however, increasingly being included on the agenda.

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