Euro zone: What to expect now for the exposed and sheltered sectors?

In the euro zone at present, the unemployment rate is close to the structural unemployment rate, domestic demand is stimulated fairly significantly , and strong labour market pressures are leading to an acceleration in wages (and unit labour costs). It then becomes important to distinguish between the sector that is exposed to foreign competition ( industry, some business services) and the sector that is sheltered from foreign competition ( household services, construction). In the exposed sector, prices cannot increase (due to competition from other countries), which can be expected to lead to a decline in profitability and a deterioration in foreign trade (due to hiring difficulties), related to the limited possible increase in production. In the sheltered sector, prices are expected to increase faster (leading to a faster increase in the relative price of services) and jobs to move from the exposed sector, enabling production to continue to increase. Recent developments are consistent with the expectations formed under this two-sector approach.