Summary

• The main impression from this round of interviews is positive economic developments and increased optimism. All business sectors report increased activity.
• Increased household disposable income is contributing to higher demand and consumption for products from domestically-oriented manufacturing. In addition, the economic situation for the business sector in general is improving.
• Positive global economic conditions, combined with the export industry's improved competitive conditions, have resulted in marked growth for export-oriented industries.
• Growth in demand for corporate services is solid. This is also the case for building and construction. Residential construction and public sector projects in particular seem to be the driving forces.
• There is still solid growth in retail trade and the household service sector.
• Economic recovery and persistently low interest rates encourage plans in manufacturing and in wholesale and retail trade to moderately increase investment. Major changes have not yet been observed in the regions, although our network contacts report positive movements. Public sector investment is still high.
• Building and construction, wholesale and retail trade and the service sector report moderate growth in employment, whereas there is no growth in employment in manufacturing and the public sector.
• In 2004, annual wage growth is expected to be 3 per cent for manufacturing, 3.0 per cent for service industries and 3.5 per cent for the public sector.
• The network reports some price increases in manufacturing and the service industries. There are no reports of a decline in prices.
• The entire private sector reports that profitability has improved.

Region South-West

• The upturn in the economy is spreading and intensifying and is no longer being driven solely by stronger household demand. In addition to high construction activity and strong growth in retail trade, the upturn is now also being fuelled by growth in exports and increased activity in the oil and gas industry.
• Optimism appears to be persisting. The market outlook for the next six months is bright for all sectors, above all for retail trade and construction.
• This optimism only translates into a moderate willingness to invest. Investment on the whole is being kept at a normal average level. The exceptions are housing investment and retail trade.
• Unlike previously, several sectors are reporting growth in employment. This pertains to the oil-related industries, retailing and the corporate service sector.
• Although all industries report an adequate supply of well-qualified labour, finding some specialists is beginning to be difficult.
• We see a nascent trend of prices moving upward. This pertains to some export industries, the oil and supplier industry and construction.
• Profitability is improving in all sectors. Cost reductions and increases in volume are resulting in better capacity utilisation and higher margins.
• Anticipated wage growth in 2004 is between 3 and 3.5 per cent.

 Region South

• Activity is rising in all industries, and the market outlook is positive. There are exceptions, however, both by industry and geographical region. New for this round is that domestically oriented manufacturing reports increased activity and a positive market outlook.
• Export industries are seeing continued growth in demand, although several contacts report keen competition. For industries that supply goods and services to the petroleum sector, it is primarily the export market that is providing growth impulses.
• The construction industry is reporting a moderate increase in demand, but in this sector there are wide local differences within the region.
• In the service sectors, there is solid growth in demand. Growth is still lower in the corporate service sector.
• Demand for capital goods, such as boats and cars, is rising considerably. Otherwise, growth in retail trade is generally solid.
• Despite the optimism, there is no sign of any appreciable rise in investment this year. Public sector investment remains at a relatively high level.
• For the region as a whole, employment is stable. Many enterprises, especially in manufacturing, report high capacity utilisation of labour. Nevertheless, few companies have plans to increase their workforces. The public sector reports stable or slightly reduced in the number of employees.
• The supply of qualified labour continues to be satisfactory. Labour turnover in enterprises is low. There are more complaints that the workforce is too stable than that turnover is too high.
• Annual wage growth is expected to remain at a moderate level and lower than in 2003.
• Selling prices are on average approximately unchanged, but there are variations at the industry level. Some industries report a continued fall in selling prices, while others report stability or a slight increase. However, there are more contacts reporting a rise in selling prices now than three months ago.
• Profitability shows a positive trend in all industries. Several contacts report increased profitability due to better capacity utilisation, which in turn is due to previous workforce reductions, combined with higher demand.

 Region East

• Export industries, retail trade and the household service sector report good growth and rising activity levels. Solid growth is expected to continue for the next six months.
• For domestic-oriented manufacturing and the construction sector, demand and output are also rising, but at a more moderate rate. Growth is expected to be moderate for the next six months.
• Investment now appears to be picking up in manufacturing industries. In retail trade and the public sector there is solid growth in investment. Capital expenditure in the health sector in particular is contributing to investment growth in the public sector. Other services report little change in the level of investment.
• There are still few signs of employment growth in the private sector. The exception is retail trade, which reports moderate growth. In the public sector, too, employment now appears to be rising somewhat.
• Although the utilisation of labour force capacity has risen somewhat in most industries, the supply of qualified labour continues to be good. Increased labour turnover in some industries, including the corporate service sector, indicates somewhat more movement in the labour market.
• Expected annual wage growth for 2004 is on average between 3 and 3.5 per cent. Low price inflation and sluggish developments in employment are expected to keep annual wage growth down.
• Selling prices are no longer falling for any industry. Export and domestic market industries and the household service sector report moderate price rises. The retail trade and corporate service sectors report unchanged prices.
• Most industries now report solid profitability growth. This is due partly to a rise in demand, partly to cost reductions and partly to higher selling prices.

 Region North-West

• The general impression is positive cyclical developments and increased optimism, but the picture is mixed. Developments vary both geographically and within the various sectors.
• Some export industries have had a period of positive price development and demand, resulting in increased activity in the furniture industry and fish farming. Maritime industries continue to experience economic weakness and are burdened by a weak USD exchange rate and higher steel prices.
• The oil and gas sector will contribute to increased activity in the northern part of the region, with the development of the Kristin field and the start-up of Ormen Lange and Skarv. This is in addition to an increase in exploration activity off the coast of Central Norway and stable demand for operating and maintenance services. This is providing a boost to other sectors, and as a result the northern part of Region North-West is characterised by optimism and a desire to invest.
• In retail trade, steadily higher volumes are being sold at low prices, but there is a trend in buying habits towards consumer durables in the high-price range.
• The business sector is demanding more services, especially those connected with activities that promote development and productivity. Tourism had a good winter and expects seasonally adjusted growth this summer.
• Reports of higher employment are the exception. Most industries will keep levels stable and focus on productivity improvements. There are still layoffs in the shipbuilding industry and poor capacity utilisation. In the second half of the year, employment growth is expected in construction in the northern part of the region.
• Suppliers of manufactured goods and providers of services to the domestic market are again seeing opportunities to raise prices moderately, thereby improving their profitability. Wage growth is expected to be as moderate as it was last year.
• In retail trade, we see a willingness to invest in capacity expansion and quality improvements. In tourism, too, there is a more rapid pace of investment, which is primarily aimed at maintenance and quality improvement, but also at new offerings and higher capacity. The rest of the business sector is not investing in capacity expansion, although it is investing somewhat in measures to promote productivity. The public sector is maintaining its level of capital spending.

 Region North

• Most industries show robust and accelerating growth in demand and production, with continued solid growth expected in the coming months. The exception is domestically oriented manufacturing, which reports stable activity levels with the prospect of only moderate growth in the near term.
• In the construction sector, public sector investment and housing construction are contributing to increased growth. The Snøhvit LNG terminal project is contributing to a favourable growth outlook.
• In retail trade, the largest contributor to increased growth comes from the capital goods market.
• Investment appears to be increasing somewhat in the retail and service sectors. In the local government sector, a sharp rise in the level of investment from 2003 to 2004 is reported for schools, day-care centres and assisted-living facilities.
• Employment now appears to be rising moderately in service industries, while manufacturing and the public sector report stable employment.
• The supply of qualified labour is generally satisfactory. However, finding some specialists may be difficult.
• Export industries report a solid rise in selling prices. In other industries there are, on average, only small changes in prices.
• Profitability is approximately unchanged for domestically oriented manufacturing and construction and rising moderately in the retailing and service sectors. There is solid growth in profitability for export industries as a result of efficiency improvements, increased demand and higher prices.

 Region Central Norway

• Contacts report continued production growth in domestically-oriented manufacturing as well as export industries.
• The retail sector reports continued strong and stable growth. Growth is still strongest for capital goods.
• Growth continues to be steady in the construction industry, and there are expectations of even stronger growth in the period ahead.
• Although employment is largely stable, there are indications of moderate growth in construction and retail trade.
• There are indications that investment activity in the public sector will diminish in the near term.
• In manufacturing, prices are rising, while they are stable in other sectors. In retail trade, prices for textiles, footwear and electronics are falling, while food prices appear to be rising somewhat.
• There are indications that banks in general are exercising more restraint in lending to the business sector. Banks are more cautious and are asking for more documentation than before.

 Region Inland

• Manufacturing sectors supplying the domestic market report some growth, which is slowly accelerating. Due to the competitive situation and efficiency improvements, there has been little change in employment levels. The market outlook is relatively good, partly as a result of increased construction activity and strong demand for many consumer goods.
• Export industries report slightly higher growth in demand. The reasons for this are developments in the NOK exchange rate and stable prices domestically. These developments have not had any particular impact on employment. There are continued pressures to rationalise and outsource production.
• Enterprises in the construction sector report increasing growth in demand and volumes in the past three months. The construction industry is profiting from the higher activity in housing construction and relatively high demand from the local government sector. The outlook for the next six months indicates continued growth at the same level.
• The service sector reports higher demand from both businesses and households. Hotel/accommodation, tourism and banking are performing positively.
• Growth in retail trade has picked up, primarily as a result of a sharp rise in car sales. The rest of the retail trade sector is performing in line with the previous interview rounds.
• In general, there has been a relatively moderate increase in manufacturing investment in recent years, a trend that will continue in 2004. This investment is largely connected with maintenance and, to a certain extent, measures to increase the level of automation and value-added.
• Employment is stable to slightly rising. Pressure to downsize in manufacturing appears to be weaker than at the end of 2003. Employment is rising in the construction industry.
• The enterprises in Region Inland expect decidedly weaker annual wage growth in 2004 than in 2003. The trend continues to be higher wage growth in the public sector than in the private sector, although both sectors have reduced their expectations for wage increases this year.
• Although price changes have been moderate in most domestic industries, there appears to be a cautious trend towards somewhat stronger price increases driven by higher import prices and stronger domestic demand. Some examples are steel, timber and cars.