jumped to an annual rate of 1. 62 million units in october, a record high for this series. moreover, sales of both new and existing homes have also held near historical highs. as i noted before, the business sector has been the locus of weakness in this expansion. however, the extreme caution that had been gripping firms now appears to be dissipating. real outlays for equipment and software rose at an annual rate of 15½ percent in the third quarter, after an increase of 8¼ percent in the second quarter. moreover, businesses also are hiring again. private non - farm payrolls increased at an average pace of about 120, 000 per month in september and october, and further declines in initial claims for unemployment insurance suggest that this improvement in the labor market has continued into november. finally, manufacturing production is perking up. although light vehicle assemblies have slipped from the very high levels of the summer, production of other goods rose 0. 2 percent in september and an additional 0. 4 percent in october, reflecting fairly widespread gains across industries. the sustainability of the recovery will depend importantly on future trends in employment, household spending, and business investment. twice before in this recovery we have seen short periods of strong growth, followed by a return to sluggish, subpar growth. given the strength of the incoming data that i have just outlined, the risk that the economy will again stall out must be given a smaller probability than that assigned just a few months ago, but the risk cannot be discounted completely. for example, the strength in consumer spending in the third quarter might prove to be temporary - a one - time surge related to the fiscal stimulus. indeed, analysts who subscribe to this view would take some solace in the latest data on non - auto retail sales. under these circumstances, businesses likely would remain very cautious about the demand conditions they expect to prevail in the year ahead. this would make them reluctant to expand and hire new workers - factors that would hold down economic expansion in 2004. while the consensus forecast for next year calls for a growth rate of 4 percent ( on a fourth - quarter - to - fourth - quarter basis ), which seems reasonable, a weaker outcome than that is not hard to imagine. productivity, potential growth and inflation one of the most prominent characteristics of this economic expansion has been the rapid gains in labor productivity. output per hour rose at an annual rate of 4½ percent in the first half of this year and at an

to an end, namely to enhance the welfare of our citizens. the achievement of sustainable convergence and competitiveness is vital for the successful membership of the euro area. to conclude i would like to thank our host governor bogov. as stated in the report of the programme we are closing today, he has already brought the nbrm in line with or close to european standards in many areas. i wish him every success in working on the remaining issues and offer our services and support to this end wherever possible. i thank ambassador orav and the european union for funding this initiative and hope that, given the importance of strong institutions, the eu also will support central bank cooperation with the nbrm in the future. and finally i would like to thank my colleagues from the ecb and the national central banks who are also represented here today for their efforts and contribution to this very successful cooperation programme. bis central bankers ’ speeches