Norwegian economic growth likely to have accelerated in Q2, employment growth to remain strong

Norwegian economic growth is likely to recovery after a temporary softness, while employment growth is expected to stay solid. This is likely to support Norges Bank’s view for a September hike, noted Nordea Bank in a research report.

“We forecast mainland GDP growth at 0.8 percent q/q (2.4 percent y/y), up from 0.3 percent in Q1. This is in line with Norges Bank’s forecast”, stated Nordea Bank.

Moreover, a widespread upturn is expected with strong growth in mainland aggregate demand. If this is right, this will be a clear indications that Norway’s economy is sheltered from the global deceleration. Manufacturing is among the sectors where the strongest growth is expected, which should be in clear contrast to most other nations at the moment. The second quarter employment figure is also significant for Norges Bank’s view.

“We forecast growth at 0.3 percent q/q, which is slightly on the weak side to Norges Bank`s forecast at 0.4 percent. Still, quarterly growth at 0.3 percent is more than enough for the labour market to tighten further. In all, we expect a GDP report which argues for a September hike, in line with signals given at the last Norges Bank meeting”, said Nordea Bank.

Meanwhile, retail sales data for the month of July is set to release later this week. The indicators point to a rather soft figure of a fall of 0.5 percent. This might contrast with the recovery seen in consumption in 2019.