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

billion at 2006 prices in both 2008 and 2009. with a period of strong expansion in the norwegian economy, somewhat lower petroleum revenue spending will be in line with the fiscal rule. our projections are based on the assumption that fiscal policy will generate some stimulus to total demand and output in 2008 and 2009, but somewhat less than the expected return on the fund would imply. economic growth in sweden, the uk and the euro area is high. economic developments in china and india remain strong. gdp growth in the us and japan has slowed. consumer price inflation among a number of our trading partners is high as a result of rising energy prices, but the increase in prices for other goods and services remains moderate. continued solid growth among our trading partners is in prospect. as global capacity utilisation increases to a more normal level, demand for norwegian exports might remain buoyant. more export enterprises are facing capacity constraints. export growth in the years ahead will probably occur in industries such as the engineering and shipbuilding industries. production growth is now high in these sectors, and employment is rising after declining for several years. high growth in the global economy has also pushed up prices for non - oil commodities. rising commodity prices and buoyant activity in markets that are important for norway have generated growth impulses to the norwegian economy. since may this year, commodity prices have varied widely, but on the whole edged up since end - june. international equity markets have stabilised since the turbulence in may, and have edged up since the previous monetary policy meeting. the benchmark index on the oslo stock exchange is now at a good 12 per cent higher than at the beginning of the year. interest rates are still low among many of our trading partners, in spite of the increases in several countries as a result of rising energy prices and higher consumer price inflation. in the us, there are now expectations that the rate tightening cycle is nearing an end, and that the policy rate will be lowered in the course of next summer. a rise in key rates is expected over the next year in the euro area, sweden, the uk, australia, japan and switzerland. in the june inflation report, norges bank assumes that money market rates among our trading partners will gradually increase over the next three years. the path for domestic and external interest rates does not imply considerable changes in the krone exchange rate. since the first quarter of 2004, the import - weighted krone exchange rate ( i - 44 ) has shown a rising trend, albeit with some