National Report Regional Network - November 2003

Summary

• Growth in manufacturing for both the export and domestic markets is weak but is picking up momentum.
• Growth in private consumption is contributing to output growth in manufacturing for the domestic market.
• Some export-oriented businesses report better international markets, for fish products, among others. Other enterprises are struggling with the falling USD exchange rate. This makes it difficult, for example, for the shipbuilding industry to obtain new orders.
• Demand for services aimed at the business sector is rising. There are strong indications that a shift occurred in the summer of 2003 - from reduced demand to increased demand.
• In general, manufacturing and the corporate service sector are marked by nascent, cautious optimism. At the same time, there is great uncertainty regarding the strength and persistence of this growth. The manufacturing sector is showing restraint with regard to capacity expansion and recruitment.
• The construction industry reports growing volume in large parts of the country. Only in the capital region does the level of activity continue to fall.
• Demand growth is highest in retail trade and household services. In the past months, growth in retail trade volume has been about 4 per cent.
• The growth in private consumption is strong enough to prevent a further decline in overall employment, and confidence in employment growth in the period ahead, especially in the service sector, appears to be increasing.
• Despite nascent optimism, enterprises' investment plans do not indicate any substantial increases in investment next year.
• Profitability is improving in both manufacturing and the service sector due to considerable focus on efficiency improvements over a longer period, better capacity utilisation and increased volume.