Contacts in the regional network in Central Norway believe that a rise in retail trade and household services is contributing somewhat to growth in the region, as is the case in the rest of the country. Growth now appears to be strong enough to hold up the level of employment. Manufacturing output increased slightly in the previous quarter. There is continued growth in retail trade. 1  Gjelsvik, M and T. Høyvarde Clausen. (2003). Verdiskapingsevnen i norske storbyregioner. Rapport 2003/144. Rogalandsforskning. BIS Review 50/2003  7  The construction industry continues to report some growth in Central Norway. Increased activity in rural districts has reduced the previous differences between urban and rural areas. House sales are on the increase and there has been an appreciable rise in house prices. A rise in the number of new orders in manufacturing and the construction industry is generating expectations that growth will continue. Most markets report intensified competition. This is partly a result of a rise in imports in some industries and increased capacity in retail trade. Margins are being reduced. In Central Norway, as in the rest of the country, lower interest rates have contributed to more positive expectations concerning future developments. There are wide regional variations in unemployment. At the end of October, 3.9 per cent of the labour force in Central Norway was registered as unemployed. This is slightly higher than the national average of 3.8 per cent.
Overall wage growth may then be lower than projected and provide the basis for an easing of monetary policy. The global economy appears to be vulnerable to new disturbances. Since summer 2002, international financial market developments have been marked by increased optimism concerning the growth outlook. Equity prices and long-term interest rates have risen. The increase has been uneven, however, and there have been wide fluctuations between major currencies. This may be a reflection of the uncertainty about the strength of the global economic recovery. Developments in the krone exchange rate represent a source of considerable uncertainty. The relationship between the krone exchange rate and the interest rate differential against other countries  6  BIS Review 50/2003  is not necessarily stable over time. Themes in international financial markets shift. We may not yet have seen the full effects of the interest rate reductions on the krone exchange rate. Even though Norges Bank is forward-looking in its conduct of monetary policy, thorough knowledge of the current economic situation is extremely important. An up-to-date and correct picture of the current situation is necessary to make accurate projections for the period ahead. In autumn 2002, Norges Bank established a regional network as a tool to gauge the level of activity in the Norwegian economy. Official statistics and evaluations of developments in financial markets will continue to be the main basis for our assessments, but due to the time lag and revisions of such statistics, supplementary information is useful.