Combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. Utilisation of production resources in the economy, labour and fixed assets, has increased markedly since summer 2003. Enterprises in Norges Bank’s regional network report high capacity utilisation and limited capacity in most industries and regions and, as mentioned, a shortage of labour in almost all industries. Some municipalities have reported that the number of vacancies is higher than the number of job-seekers. There are also reports of shortages of other factor inputs. Not since the 1970s have there been such frequent reports of purely physical production constraints. Reports from enterprises in Region Central Norway are not very different from the rest of the country. All industries report solid growth. Growth appears to be strongest in retail trade and services, while the building and construction sector reports only moderate growth. Continued growth is expected, but capacity problems are a constraint on growth in a number of industries. An increasing number of enterprises report that they have limited available capacity. For most enterprises, the labour supply is the most important constraint. Investment is expected to continue growing in all industries and in the local government sector. Employment is also growing, except in the building and construction industry, where employment growth now appears to have levelled off. Enterprises expect appreciably higher wage growth than at the same time last year. Enterprises state that higher pay is an important edge in the competition for labour.
After a long period of high housing investment and rising prices, activity in the housing market now appears to be slowing. Seasonally adjusted, house prices have fallen for four consecutive months. In recent years, house price inflation has been accompanied by strong growth in household debt. Credit growth remains high. Higher interest rates and falling house prices may lead to slower consumption growth and a higher saving ratio ahead. There are large regional differences in house price developments, but the trend has been the same since year-end 2006. House price inflation is decelerating in all regions, with a 12month decline in house prices in Hedmark and Oppland and a rate close to zero in Trøndelag. The strong rise in house prices has been accompanied by an increase in turnover up to the summer of this year. The stock of homes for sale has varied somewhat in recent years, but since summer 2006 there has been a sharp increase. This may explain some of the decline in house prices in recent months. The present economic expansion differs from previous upturns in that inflation has remained low so far despite strong growth and increasing capacity utilisation. There are several reasons for this. First, low import prices and high prices for our commodity exports have improved Norway’s terms of trade appreciably. Prices for oil and gas, freight, fish, industrial commodities and engineering products have increased considerably.