Norges Bank’s regional network report suggests stronger growth in Norway

The regional network shows that growth in Norwegian production and employment is picking up. The survey is on the solid side compared to Norges Bank. The central bank has published its first quarter regional network report. The main indictor was 1.32 which indicates a quarterly growth between 0.6 and 0.7 percent quarter-on-quarter. The forward-looking indicator is 1.42 which indicates growth at 0.7 percent quarter-on-quarter. Norges Bank’s forecast suggests growth at 0.6 percent in the first quarter and the second quarter.

Norwegian growth picked up strongly in 2017, and today’s survey indicates in the direction of at least as solid growth as in 2017. Growth is widespread and stronger growth in services explains the pickup together with oil related sectors. Growth decelerated slightly in construction, but keeps up better than expected given the deceleration in housing activity, noted Nordea Bank in a research report.

The indicator for employment rose and affirms the picture from the fourth quarter official employment figures; employment is rising much faster than Norges Bank has projected. It now indicated towards year-on-year growth at 1.6 percent compared to Norges Bank’s projection of 1 percent. The only thing pulling in the opposite direction is the indicator for labor market pressure which has remained the same. But the indicator for capacity utilization rose.

The survey indicates towards slightly stronger growth in production than expected by Norges Bank, but considerably faster growth in employment. Taken together with lower than expected unemployment, this argues for a higher rate path at the coming March meeting, added Nordea Bank.

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