It does appear likely that the high level of productivity growth has to some extent been cyclical and a result of the composition of growth. It is reasonable to believe that productivity will increase at a slower rate in future as growth is expected to be linked to a greater extent to strong domestic demand and increased production in the private services sector. All in all, declining productivity growth and higher wage increases as the labour market improves ought to lead to a gradual rise in companies' production costs. However, the cost increases look to be moderate, and we expect that cost pressures will remain relatively low over the coming years. It should be emphasised that it is difficult to determine exactly how far productivity growth will slow down and thereby how much companies’ costs may increase in future. It is likely that the rate of increase in productivity has risen as a result of the large-scale investment in information technology made by companies at the end of the 1990s and due to the effects of globalisation on competition and output. However, it is fully possible that we will have reason to revise up our forecast for productivity growth even more in coming years. It is just as conceivable that productivity growth will prove to be weaker than estimated. Gradually rising inflation Inflation has remained low since the end of 2003.
At the same time, the high productivity and relatively good corporate profitability can be expected to be reflected in favourable wage growth in the period ahead. Altogether, this means that the prospects for good for firm growth in domestic demand and employment over the coming years. 2/4  Compared with the assessment in June, we today have somewhat more expansionary monetary policy. The budget bill that was presented in September also suggests that fiscal policy, particularly in 2006, will be slightly more expansionary that we anticipated then. That indicates that we might have to revise up our growth forecasts for the Swedish economy somewhat in the years ahead. All in all, this means that growth appears able to remain firm in the coming years. Gradually, however, growth should slacken somewhat, which is in line with a normal cyclical pattern with a normalisation of growth in investment and productivity. Less expansionary economic policy is also expected to contribute to somewhat lower growth in 2007 and 2008. Capacity pressures to rise gradually As regards developments in the labour market, the assessment of the current tendencies has been made more difficult by the change in methods in the labour force survey. With this reservation, it can nevertheless be said that there are signs that the situation in the labour market is improving. According to the National Accounts the number of hours worked began to rise in the second quarter this year.