Economic situation remains positive

The economic situation looks positive at the end of October. The heart of the indicators in the Business Cycle Tracer is located in the high economic growth stage. This means that the growth rate of most indicators is increasing and above their long-term average.

The economy grew substantially in the second quarter of 2006. Gross domestic product (GDP) volume was up by 2.8 percent on the year before. Exports were the main driving force behind this growth rate. Improving household consumption and increasing investments contributed positively as well. The second quarter of 2006 had one working day less than in 2005.

After adjustment for calendar and seasonal effects, GDP volume was 1.2 percent higher than in the first quarter of 2006. This was the highest quarter-on-quarter growth rate in more than two years.

In August the volume of goods exports was almost 9 percent larger than in the same period in 2005. Manufacturing production in July was almost 3 percent up on the same month last year. Household consumption rose by 1.5 percent on July 2005.

In October, the already optimistic mood of producers in the manufacturing industry improved even further. Business service providers are optimistic as well. The majority of entrepreneurs expect to receive more orders and a higher turnover in the fourth quarter of 2006. Consumer confidence didn’t change in October. Among consumers, the optimists outnumber the pessimists.

The capital market interest rate fell slightly in September. The inflation rate in September stood at 1.1 percent, 0.3 percentage points lower than in August. The August prices in the manufacturing industry were 5.1 percent higher than in August 2005.

Unemployment increased for the first time in the period July-September. This followed a year in which unemployment kept falling. In the second quarter, both the number of jobs and the number of vacancies increased further. There was also a rise in the hours worked in temp jobs.

Gross domestic product