This year again, the Austrian economy is set to grow by over 3 percent, decelerating only in 2008 to an expected rate of 2½ percent. On the back of robust activity, employment is rising steadily, accompanied by a continued decline in unemployment. Wage increases remain unusually tempered for the present stage of the business cycle, weighing on consumption while holding back inflation despite the strong growth of output. Government balances enjoy a significant cyclical improvement from the revenue side.