Norway’s Labor Market Shows Strength to Support Rate Hike Plans

(Bloomberg) --

Norway’s labor market is showing resilience, supporting plans by the central bank to raise interest rate again as soon as next month.

Registered unemployment, the central bank’s preferred jobs gauge, fell to 2.3% in August, the Norwegian Labor and Welfare Organization said in a statement. That matched an analyst forecast. Seasonally adjusted, the rate fell to 2.2%, in line with the central bank’s prediction.

Key Insights

• Registered unemployment hit a more than decade-low of 2.1% in May, during a period that has seen the economy growing above trend driven by a surge in oil investments.
• In June, Norges Bank raised its benchmark rate for a third time in less than a year to 1.25%, and said that another hike could come in September.
• The so-called NAV rate of unemployment is a narrower measure than the surveyed unemployment rate, as it only counts Norwegians who have filed jobless claims.
• On Friday, the Norwegian consumer confidence indicator fell to the lowest level in three years amid concerns over international trade conflicts and Brexit uncertainty. The largest decrease was seen in the confidence indicator for the economy in the next 12 months.

What Economists Say

• “Unemployment fell in August, after moving about sideways earlier this summer. This supports a Norges Bank hike in September,” Nordea senior economist Erik Bruce said in a note.
• “Today’s figures do not change our expectations for the key policy rate path. We stick to our base-case, which is that the key policy rate has already peaked at 1.25%,” Handelsbanken senior economist Marius Gonsholt Hov said in a note.

Market Reaction

• The Norwegian krone strengthened 0.2% to 10.042 per euro as of 11:03 a.m. in Oslo.

Know More

• For more details, see this table

An earlier version of this story corrected historical data.

To contact the reporter on this story: Sveinung Sleire in Oslo at ssleire1@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Stephen Treloar

©2019 Bloomberg L.P.