Norway Unemployment Holds at 4% as People Flock to Labor Market

(Bloomberg) -- Norway’s unemployment rate was unchanged at 4 percent in October for a fourth month as more people sought jobs, providing backing to the central bank’s plan to raise interest rates again over the next months.

Surveyed unemployment edged up to 114,000 from 113,000 in September, while the number of employed grew to 2.714 million from 2.707 million, according to Statistics Norway. The employment rate rose to the highest in at least three years.

Norway Unemployment Holds at 4% as People Flock to Labor Market

Key Insights

  • The strong labor market gives backing to Norway’s central bank’s plan to raise interest rates again in March.
  • Policy makers tightened in September for the first time in seven years as the economy has now fully recovered from the collapse in oil prices in 2014.
  • Central bank in December lowered its long-term rate forecast amid growing concerns over a recent slide in oil prices and slowing growth abroad.
  • The so-called AKU rate is a broad measure of unemployment, which measures the jobless rate via a survey of households.
  • Norway’s central bank prefers to look at registered unemployment, which was 2.3 percent at the end of the year.

What Economists Say

  • “The recent increase in the labor force suggests that labor market tightness is more limited than what the strong employment numbers suggest, thus adding to our view of slight downside risk to Norges Bank’s wage growth estimates for 2019,” Swedbank economist Marlene Skjellet Granerud said in a note.
  • “For Norges Bank, continued strength of labor markets is important in order to ensure that households can cope with higher interest rates, since solid jobs growth and a closing of the output gap is expected to push wages higher and support consumption,” SEB analyst Tobias Ogrim said in a note.
  • “Today’s data release does not affect the outlook for the key policy rate path,” Handelsbanken economist Marius Gonsholt Hov said in a note.

Know More

  • For more details, see this table

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