. these developments may have been particularly relevant for the retail and construction sector. in addition, concerns about trade protectionism may also have dampened business sentiment and expectations. nevertheless, the recent slowdown could also be a sign that supply - side constraints are becoming increasingly binding, albeit only in some sectors and in some countries. for instance, in the capital goods sector, capacity utilisation and backlogs / supply delivery times stand at alltime highs. whereas in the construction sector, an increasing number of firms are indicating that a shortage of labour is limiting their production. there is so far no evidence that the moderation in the pace of economic expansion reflects a durable softening in demand. recent information remains consistent with a solid and broadbased expansion in domestic demand. sentiment indicators remain in expansionary territory and 1 / 4 bis central bankers'speeches are still well above long - term averages for most sectors and countries. moreover, the underlying momentum is still supported by favourable financing conditions, a robust labour market and steady income and profit growth. the ongoing expansion has led to strong employment gains. the number of people employed in the euro area has increased by more than 7. 8 million since the trough in mid - 2013. this implies that all of the job losses recorded during the crisis have been recovered. the unemployment rate is at its lowest level since december 2008, despite an increase in the labour force of more than 2 %. consumer spending is being driven by steady growth in households ’ real disposable income, favourable bank lending conditions and the notable progress achieved in deleveraging. since 2016 employment growth, together with the gradual increase in compensation per employee, has become the main driver of households ’ real disposable income. the contribution of taxes and transfers, by contrast, has become more negative, as automatic fiscal stabilisers act to somewhat dampen the growth of real disposable income in times of economic expansion. these developments contrast with the early years of the recovery ( 2014 – 15 ), when real disposable income was still strongly supported by improvements in the terms of trade as a result of the fall in oil prices. the investment outlook continues to strengthen and is supported by an ongoing need to modernise the capital stock after years of subdued investment, as well as by very favourable financing conditions, an improvement in profitability and solid demand. the european commission ’ s biannual investment survey, which was released on 27 april, shows expectations of a strong increase in

shocks originating elsewhere. there is no longer any need for a cross - border structure for a country to be infected by an external shock. 5 l. bini smaghi ( 2007 ), “ consolidamento bancario, innovazione e accesso al credito, cesifin, florence, 10 december 2007, available at http : / / www. ecb. int / press / key / date / 2007 / html / sp071210. it. html. see also bruegel ( 2007 ) : “ coming of age : report on the euro area ”, bruegel blueprint 4. third, although it is not in principle an optimal model of financial regulation, the recent market turbulence has revealed structural weaknesses in some supervisory systems. in particular, it has shown the need to ensure that the central banks, which are responsible for supplying the markets with liquidity, especially in emergency situations, have all the necessary information at their disposal in order to assess the capital adequacy and sound balance sheets of their counterparties. the ecb had drawn attention to this in the past. 6 finally, the supervisory authorities appear less protected than the central banks from external pressures, which aim to reduce their decision - making autonomy. the concept of independence, which has been developed for monetary policy, is however not easily extendable, merely via regulations, to the supervisory authorities. this, however, also applies to the problem of accountability. 7 in a financial market in which there is room for a certain degree of regulatory competition and in which the supervisory authorities have a mandate and a predominantly national system of accountability, there may be incentives to utilise the margins for manoeuvre that european legislation leaves for protectionist purposes. there may also be disincentives for a proper exchange of information, necessary in order to guarantee the stability of the market. the risk of harming the financial institutions of one ’ s own country and of exposing them to possible acquisitions may discourage a timely transmission of the information to other authorities, especially in periods of financial turmoil. in brief, the developments under way in the financial markets are causing two types of problem to emerge. first, the continual integration of markets increases the inefficiencies resulting from a variety of laws, or applied in different ways in different countries. second, the possibility of applying the laws in various ways reduces the incentives for proper coordination between national supervisory authorities in respect of the prevention and resolution of crises.