Norwegian employment and production likely to grow strongly in quarters ahead

Nordea Bank’s third quarter regional network report indicates towards continued solid expansion in employment and production. The main indicator, which is the current situation, came in at 1.35 that points at a quarter-on-quarter growth at 0.68 percent. This figure is close to the central bank’s projection of 0.7 percent. The forward looking indicator came in at 1.43, indicating that growth of 0.73 percent is slightly on the upside to Norges Bank’s forecast that suggests growth at 0.6 percent in the fourth quarter and first quarter of 2019, noted Nordea Bank in a research report.

Growth is usually solid in most part of the economy with the exception of the retail sector. It probably struggles more with structural problems than more business cycle determined factors.

The survey shows that employment might expand 0.4 percent in the third quarter and 0.5 percent in the quarters ahead. This suggests that employment growth will increase again after a second quarter somewhat on the weak side. Still, the employment picture is slightly on the soft side to Norges Bank’s view.

The indicator for capacity constraints was slightly changed, but the indicator for labor market tightness increased. Survey released today indicates towards continued solid growth in production and employment.

“In sum we view it as very much in line with Norges Bank’s view. The hike next week is a done deal and the main question is how much the rate path will be revised up on the back of the weak NOK and high inflation”, stated Nordea Bank.