Norwegian jobless rate rises in November, Norges Bank likely to hike rate in March 2019

The Norwegian jobless rate rose in the month of November. On a seasonally unadjusted basis, the jobless rate rose to 2.3 percent from 2.2 percent seen in the prior month. This is also a tad above the consensus expectations of 2.2 percent. Because of a change in the registration procedure, making it easier and more rapid to register as unemployed there is a break in the series from October, noted DNB Markets in a research report.

This change in isolation results in a rise in unemployment of 2500 persons, while other methodological changes made earlier in 2018 leads to a rise in the number of registered unemployed of 1200 persons. It is difficult to directly compare the figures in October and November, but according to NAV, the level of unemployed dropped from October to November when correcting for these adjustments.

According to NAV, the number of registered unemployed fell 900 persons from October to November when adjusting for seasonal factors. Therefore, unemployment should be consistent with Norges Bank’s forecast of a slight decrease in the seasonally adjusted unemployment rate.

“The weak consumption trend the last months is probably to a large extent related to temporary lower purchasing power due to high electricity prices, but Norges Bank will likely have to adjust down its forecast for private consumption this year and next year in its December-MPR and the central bank will likely follow consumption trends closely going forward”, said DNB Markets.

The fall in consumer sentiment also argues that the consumption outlook might a bit more negative than anticipated.

“We stick to our view of a rate hike to 1.00 percent in March, but find it likely that Norges Bank will adjust down its rate path in December and we see an increasing risk that the expected September-hike could be postponed”, added DNB Markets.