Summary

• All regions report continued solid growth in output and demand in most industries. On the whole, this trend is expected to continue for the next six months.
• Domestically oriented manufacturing and service industries in particular show further growth since the last reporting round, while the growth rate of the export industry and retail trade shows signs of slowing.
• A high level of activity is reported in regions where petroleum-related manufacturing has a strong position.
• Lower volume growth is reported in traditional export industries because of the strong krone and tough competition. However, new orders for the shipping industry have picked up strongly during this past period, but the full effects on activity will not be felt until next spring.
• There are plans for a moderate increase in investment throughout the private sector. The general picture in manufacturing is still that investment is being focused primarily on improving production efficiency, but there are now also reports of plans to increase capacity.
• Enterprises are still cautious with regard to new recruitment. Employment is increasing somewhat in construction, retail trade and other services. The labour market has become somewhat tighter for most industries during the past six months. The construction industry in particular reports a shortage of qualified labour.
• Moderate wage growth, approximately in line with the previous round, is reported in manufacturing and retail trade, while wage estimates for services and the public sector are somewhat higher than in the previous round.
• Strong competition is still curbing price increases, but prices are now rising at a faster pace in some service industries and in construction.
• Overall, the main industries are still showing higher profitability.

Region South-West

• Demand is increasing in all sectors, but the growth rate is slowing somewhat in the export industry and in retail trade.
• Fear of a high krone exchange rate is growing in the export industry.
• The market outlook for the next half year is bright for all business sectors, and particularly for domestically oriented manufacturing, the petroleum industry and construction. Optimism in the export industry is declining compared with this summer.
• The outlook for the future and increased profitability are translating into a slightly increasing willingness to invest in all sectors.
• Employment is increasing moderately in construction, petroleum-related manufacturing and retail trade. The use of temporary employees is increasing, and temporary employment agencies are recruiting heavily.
• All business sectors report that the supply of well-qualified labour is still satisfactory, but it is becoming difficult to find some specialists.
• Prices are moving only marginally. The exceptions are petroleum-related manufacturing and export-oriented processing industries as well as construction, where increases are moderate.
• Profitability is still improving substantially in all sectors. As a result of cost reductions and higher volume, capacity utilisation has improved and margins are higher. In the export industry, profitability is also being driven by higher prices in the global market.
• Capacity utilisation is at a stable, high level or increasing in all sectors.

 Region South

• All industries report increasing activity. Domestically oriented manufacturing, construction and household services report the strongest growth.
• The market outlook is positive, but optimism is more cautious now than in the previous round. Manufacturing as a whole has expectations of moderate growth in the next 6 months. Construction, retail trade and service industries are expecting a solid increase in the level of activity.
• There has been sharp growth in domestically oriented manufacturing in the last quarter.
• The export industry is experiencing solid growth, but a number of our contacts, particularly those supplying the petroleum sector, are now experiencing tough competition because of the strong krone and weak US dollar.
• A sharp increase in demand is reported for construction.
• The service sector reports solid growth, but household services still report somewhat stronger growth than corporate services.
• There is pronounced growth in manufacturing investment. Retail trade reports moderate growth. Public sector investment and service sector investment remain stable.
• The region as a whole reports solid growth in employment in the service sector, and moderate growth in retail trade. Employment is roughly unchanged in manufacturing, construction and the public sector.
• There is a plentiful supply of qualified labour in all industries except construction.
• Annual wage growth is around 3.5% in manufacturing and the public sector. Service industries report about 3.0% in this round.
• Selling prices have been more or less stable for the last 3 months for manufacturing, but retail trade and other service industries have experienced a slight dip in selling prices.
• Profitability is growing in all industries apart from petroleum-related industry, where it has remained stable. The strongest growth in profitability has been in manufacturing for the domestic market.

 Region East

• In this round of interviews, all industries report solid growth in output and demand. Expectations for the next six months are similarly positive.
• In line with market prospects six months ago, demand growth for both the domestically oriented and export industry is solid. The furniture, printing and building supplies industries are all experiencing solid growth, as are export enterprises in the metals and chemical industries.
• In construction, demand growth remains firm, but the rate of growth is somewhat lower than reported in the previous round. This is largely due to reports of declining growth in house sales.
• Retail trade reports continued solid demand growth, but growth in demand for consumer durables has slowed somewhat over the past months. Nevertheless, satisfactory growth is expected in most retail trade segments in the next six months.
• Solid demand growth and a favourable market outlook are contributing to moderate growth in investment plans in all private sector industries.
• Manufacturing employment still appears to be declining somewhat. Employment elsewhere in the private sector is increasing moderately. Local government and national health enterprises report unchanged employment.
• The supply of qualified labour is still assessed as being above normal in most industries, but the labour market has become somewhat tighter in the last half year for the whole economy with the exception of manufacturing.
• The expected growth in annual wages for the private sector is about 3.5%. This is somewhat higher than reported in the previous round.
• Selling prices in manufacturing and services are rising, while prices in retail trade as a whole remain stable.
• There is now solid growth in private sector profitability. The exception is retail trade, which now reports unchanged profitability, after reporting continuous growth in profitability since the start of the regional network in autumn 2002.

 Region North-West

• This autumn the positive output and demand trend has continued in most industries. Increased activity and demand from the oil and gas industry, greater willingness to invest and generally increasing optimism are stimulating developments.
• In general, industries oriented towards the Norwegian market are showing a positive trend, while the furniture and shipbuilding industries are also gaining strength on the export side.
• During this last period, new orders to the shipbuilding industry have shown a particular improvement. This applies especially to contracts for offshore vessels, where the shipyards in the region hold a strong international position. However, prices remain low.
• Conditions in fish-farming are turbulent as usual, and this spring's optimism gave way to disappointment after a fall in prices due to excess supplies as a result of a good growth season and uncertainty associated with access to markets in the future.
• Services are showing solid growth, with corporate services showing higher growth than household services. The travel industry has experienced normal/solid growth during the last period. Individual travellers spend more money and are more profitable customers.
• After strong growth earlier this year, demand in the retail trade sector has levelled off somewhat this autumn. However growth is expected to remain solid in the next six months.
• Employment is now increasing somewhat in construction and services, but in many industries new recruitment is on hold. There are some signs of a shortage of labour for construction, particularly in the north of the region. Other industries have a plentiful supply of labour.
• Willingness to invest has increased, but there is little investment to increase capacity.
• Price increases are being curbed by strong competition in most industries. The first signs can be seen of price increases due to higher prices for raw materials.
• Wage growth has been moderate, with an increase of approximately 3% in manufacturing and between 3.5% and 4.5% in service industries and the public sector.
• Unchanged profitability is reported for manufacturing, while in other industries it is rising moderately.

 Region North

• The general impression from this round of interviews is that there is still growth in demand in most industries. Growth is strongest for domestically oriented manufacturing, building and construction and corporate services, while growth is more muted in retail trade and household services. Growth in the export industry has come to a halt.
• The outlook for the next six months indicates that growth in demand is declining in all industries except export-oriented industry, where growth is expected.
• The public sector reports limited investment, while private sector investment is expected to increase. In the private sector, investment is aimed at improving efficiency and maintenance in manufacturing, services and retail trade.
• Employment growth is continuing in construction, but at a lower rate than reported in the last round. A decline in public sector employment is reported, and moderate growth in services. Employment in manufacturing and retail trade is approximately unchanged compared with the previous period.
• The supply of qualified labour is satisfactory, but it is difficult to recruit health and care providers, qualified construction personnel and car mechanics.
• Annual wage growth for 2004 is projected at 4.0% in the public sector, 4.5% in service industries and 3% in manufacturing.
• Domestically oriented manufacturing reports that the rise in prices has tapered off. Prices have been increased primarily to cover increased raw material and labour costs. The export industry is seeing prices pushed down by the stronger krone. Prices in retail trade are rising, while prices are stable for corporate services, but falling for household services. Prices in construction have not changed in the last period.
• A decline in profitability is reported for the export industry. The other industries report continued growth in profitability, but at a slower pace than reported in the last round.

 Region Central Norway

• The cyclical picture has not changed in the past six months.
• There is growth in manufacturing output, service industries, construction and retail trade. For manufacturing output, demand growth appears to be strongest in the export market.
• Our contacts expect growth in the period ahead to be approximately in line with growth so far in 2004.
• Employment is generally stable, but there are signs of growth in construction and services. Employment is largely stable, also at the enterprise level.
• The supply of qualified labour with nearly all kinds of expertise is still very good, but appears to be weakest in construction, where there has been a high level of activity for a long time. The supply of IT expertise is not as extensive as it was in 2003.
• The rate of investment in the region is stable. Public sector investment remains high, but is not increasing.
• There are indications of a slight rise in selling prices for manufacturing, construction and service industries. An important reason for this seems to be that cost increases are now being passed through to selling prices. This is possible because demand in markets has increased.
• Wage growth appears likely to be close to 3.5 per cent in 2004.
• Profitability is moving on a positive trend because of a higher activity level, but there are no major changes for small and medium-sized enterprises.

 Region Inland

• Domestically oriented manufacturing is continuing to grow. Growth in building supplies is limited to some extent by capacity constraints and increasing competition from imports. The market outlook is generally favourable, partly due to increased construction activity and strong demand for many consumer goods. The food industry, which is important in Region Inland, is experiencing steady, moderate growth. There are reports of rising pressure on prices.
• The export industry reports generally positive growth in demand, but the picture is mixed. A number of enterprises are benefiting from stronger international markets and ambitious expansion plans, while others are experiencing strong competition and weak markets in Europe.
• Construction is experiencing strong growth in demand. In the building sector, residential construction and demand from the municipal sector in particular are making a positive contribution, as is increased activity in Romerike Municipality. The outlook for the next six months indicates that growth will remain solid. A number of enterprises are finding the supply of qualified personnel to be a limiting factor.
• Developments in services and wholesale and retail trade are generally positive in both the corporate and the household sector.
• There is little change in investment, but it appears that some growth can be expected in manufacturing and in particular in the service sector. The local government sector reports that less investment is planned in 2005.
• Employment is on the rise in the construction sector, while manufacturing employment appears stable. Services (excluding retail trade) are growing moderately in terms of employment.
• Profitability is improving in most industries, especially in construction. The reason for growth in all industries appears to be higher volumes and moderate cost inflation combined with a persistently strong focus on rationalisation measures.