NORWEGIAN CONSUMERS GAIN CONFIDENCE.

Confidence among Norwegian consumers and business leaders is on the rise, and that will contribute to healthy gains in private sector consumption as 2004 progresses.

The jobless rate in Norway began to slide during the fourth quarter of last year in an atmosphere of increased commercial activity. One of the most important forces behind job creation is entrepreneurial startups. About 4,000 new businesses are established each year in the Oslo metropolitan area. About 20 percent of those are established by non-Western immigrants hoping to become long-term residents of Norway.

As the number of small businesses rises this year, so will demand for small-business services. Taken as a whole, the value of orders for such services should achieve year-on-year growth in excess of 4 percent during the second quarter of 2004, rising to over 5 percent during the third quarter. Strongest sales growth will be noted in the information technology and telecommunications sectors.

As commercial activity rebounds and job-related concerns subside, orders for high-end durables should gain upward momentum this year. Look for sales of household durables to rise in the range of 3 to 5 percent up to midyear, surpassing the 5 percent mark during the second half. By contrast, household expenditure on non-durable goods will experience anemic gains of less than 2.5 percent year-on-year through most of 2004. Long-term growth projects are limited by Norways slow rate of population growth.

Real household income will rise by about 5 percent in 2004, and mortgage rates should remain attractively low. As a result, strong demand for new and pre-owned housing will prevail through this year. Orders for construction materials and services should show year-on-year growth in excess of 5 percent for the year.