spilled over into investment and domestic consumption, and especially into employment. initially, an improvement in equipment investment and employment results from an increasing level of capacity utilisation. thus, in manufacturing, the rate of capacity utilisation has been rising steadily since 2002 and has now reached a historical high. the corporate sector, which in 2005 was still hesitant about the soundness of the recovery, held a more favourable view last year. as a result, companies considerably stepped up their investment plans for equipment. at the same time, they created jobs – in particular full - time positions – at a faster rate. this led to a quicker drop in unemployment and the increased use of foreign labour. consequently, 2006 was very clearly a year of consolidation in the economic cycle, following the uncertainties of the prior periods. the current outlook represents a continuation of this situation since the order books are well filled and the ceo confidence index remains positive. thus, the rate of unemployment is likely to continue dropping over the course of the next few months. one sector that is dependent less on the foreign economic situation and more on the financial environment is the construction sector. residential construction has benefited strongly from the low interest rates over the past few years. in 2006, 41, 000 new dwellings came onto the market or almost double the number in the early 2000s. demographic developments as well as increasing incomes linked to favourable financing conditions assured a healthy level of demand. nevertheless, there were initial signs of saturation, and a gradual drop in the mortgage growth rate was evident. everything points to a further decline in growth momentum for residential construction this year. by contrast, industrial and commercial construction is likely to continue improving. growth in employment and income had a favourable impact on household expenditure. growing at a rate of some 2 %, consumption became a driver of the economy, a situation which contrasted to that of past years. the continued decline in unemployment over the months to come is likely to consolidate this picture. overall, the swiss economy recorded real growth of about 3 % in 2006. this was the best result since 2000. while enjoying the benefits of healthy demand in both foreign and domestic markets, it was also able to take advantage of the increased flexibility of local production attributable to the fact that the labour market had been opened up to nationals of neighbouring countries – without threatening domestic employment. in the course of the past twelve months, almost 60, 000 new jobs have been created – a figure unmatched since 2001 – while the number of jobless

heritage. due to the courage and sacrifices of those who preceded us, we now reap the benefits of a prosperous economy and a healthy currency. our gratitude also extends to the authorities and to the swiss people. we are appreciative of the confidence placed in us by the federal council and by parliament. in guaranteeing our independence, the federal constitution gives us the means to act entirely in the interests of monetary stability. the political authorities can count on us using our freedom of action solely in the interests of fulfilling the mandates with which we are entrusted by the legislator. we are also aware that, despite our efforts to communicate our decisions, the general public often finds them difficult to understand. that is why we truly value the confidence that the public places in us. it helps to sustain us when carrying out the mandate with which we are entrusted under art. 99 of the federal constitution, that of conducting a monetary policy that serves the interests of the country as a whole. finally, i would also like to thank you, the shareholders of the swiss national bank. as representatives of cantons, cantonal banks, collective bodies or swiss public law institutions, or as individual shareholders, you have faithfully supported the swiss national bank since its foundation in 1907. you have remained at its side throughout all the ups and downs of its history and we are grateful for your support. your presence is the guarantee of our independence, an essential factor in the success of our efforts to preserve the monetary stability of our country.