tightening. considerable labour inflows following the enlargement of the eu and the eea in 2004 also contributed to increasing potential output. a substantial share of inward labour migration is accounted for by foreign companies with contracts in norway. labour inflows from the new eu member states still appear to be growing, with the construction industry absorbing a particularly large share. on the other hand, a rise in sickness absence and the number of persons on disability benefits are pushing down production capacity this year. in view of the tightening taking place in the swedish labour market, there may be reason to expect a reduction in the supply of labour from sweden. over the past six months, there have been steadily growing signs of labour shortages in the norwegian economy. unemployment has shown a marked decline and is now at a low level. employment is still on the rise, while the labour force as it has been registered in current statistics has remained virtually unchanged in recent months. seasonally adjusted, registered unemployment stood at 2. 4 per cent of the labour force in september. the number of registered unemployed adjusted for seasonal factors was close to 59 000. unemployment has declined for all occupational groups and has been most pronounced in manufacturing, the construction industry and in the engineering and ict sectors. there are probably limitations to how much the supply of norwegian labour can increase in the period ahead. labour participation rates are high, particularly when taking into account demographic developments. developments in the labour market are similar to the profile observed ahead of the period of accelerating wage and cost inflation that started in 1998, but wage growth has been fairly moderate since the upturn began. several factors may have contributed to this. an increase in inward labour migration and the opportunities provided by an international labour market may have prompted participants in local and centralised wage negotiations to place greater emphasis on the considerably higher wage level in norway relative to our trading partners and potential job vulnerability. at the same time, inward labour migration has reduced bottlenecks in some industries. however, despite increased labour market flexibility, the risk of higher growth in labour costs is now probably rising. the business sector in the southwestern part of norway includes a large number of petroleum - related activities and manufacturing companies. the number of public sector employees is clearly lower in rogaland than in the rest of the country. the industry structure in hordaland is very similar to the rest of the country. information from norges bank ’ s regional network confirms the impression that the cyclical upturn is continuing. region south - west

the coming years. unemployment is set to edge up to around pre - pandemic levels. 2 / 3 bis - central bankers'speeches wage growth is expected to slow from next year. but given a slower rise in prices, wages are expected to rise faster than prices in the years ahead. there is uncertainty about future developments in the norwegian economy. if business costs continue to accelerate rapidly or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged. 3 / 3 bis - central bankers'speeches