Only the public sector, retail trade and other services are planning to invest somewhat more compared with last autumn. Employment in Northern Norway does not seem to be on the rise in the private or public sectors, with the exception of the construction industry. Firms generally report that they have considerable idle capacity and that they are continuing to rationalise operations. At the same time, selling prices are rising moderately in the export industry and services, but falling slightly in manufacturing for the domestic market. Strong competitive pressures provide limited scope for price adjustments. This applies for example to transport and logistics firms, which are expecting further pressure on prices when the EU enlargement on 1 May makes it easier for foreign competitors to enter the market. Some equipment suppliers, however, announced substantial price rises for some intermediate goods. Profitability is increasing moderately in all sectors except manufacturing. One third of the labour force in Norway is employed in the public sector. In Northern Norway, this proportion is closer to 45 per cent. The primary industries are important for the counties in Northern Norway, especially because of the abundant fish resources in coastal areas. A large part of the fishing industry is export-oriented and is increasingly competing with low-cost countries. These industries will be vulnerable when the rise in domestic costs is high. There are wide regional variations in unemployment. At end-February, an average of 4.5 per cent of the labour force in the three northernmost counties was registered as unemployed.
Economic developments There are clear signs that the global economy has passed the trough. However, while the outlook is brighter, price inflation is still low and interest rates are being kept unusually low. Economic growth is high again in the US. After a surprisingly long period of weak labour market developments, the latest employment figures indicate that the situation may now have been reversed, although there is still excess production capacity and very low inflation. It may take some time before interest rates are increased substantially in the US. Growth in Asia is solid, but a global rise in interest rates is unlikely to start there. Inflation is higher in the euro area than in the US and approximately in line with the objective defined by the European Central Bank. In the euro area, however, capacity utilisation is very low, unemployment high and the outlook for growth is weaker. Recently, there have also been signs that inflationary pressures are moderating. Against this background, it will probably take time before interest rates rise markedly in the euro area. Interest rate expectations were continuously revised downwards up to March this year, and an increase towards a more normal level was postponed in the US and the euro area. Interest rates abroad have been unusually low for 2½ years, and are likely to remain low for some time to come, despite the above-mentioned signs of a somewhat swifter rise. This has been the greatest challenge for our monetary policy.