Norwegian jobless rate dropped again in September after falling in August. Registered unemployment dropped seasonally adjusted by 400 persons in September, well in line with expectations. This indicates that the downward trend in unemployment is in place, but has slowed down. The sideways movement in summer might imply that the bottom was reached. The current solid growth in employment should be sufficient to push unemployment even lower, noted Nordea Bank in a research report.
The central bank, Norges Bank, appears to have drawn the opposite conclusion and has predicted unchanged unemployment this and the months ahead. A change in its view on the labor market was main argument for a lower path at the last Norges Bank meeting. Norges Bank now sees much greater potential for growth in labor supply and therefore forecast about flat unemployment in spite of a lift in its forecast for employment.
“Of course, we need to see unemployment falling further the coming months for Norges Bank to rethink its assumption about labor market tightness. But to us todays figure raised the probability for a lift the rate path in December. The path should not be lifted much before it indicates a higher than 50 percent probability for a hike at the March meeting”, added Nordea Bank.
