Norway: Is the downward trend in unemployment in place? – Nordea Markets

Erik Johannes Bruce, Research Analyst at Nordea Markets, expects that the Norway’s registered unemployment will probably fall sharply in August after the surprise rise in July and the retail sales will remain low, but that is no reason for concern.

Key Quotes

“During the summer we received two seemingly weak figures, July registered unemployment and June retail sales. With August registered unemployment and July retail sales we will see whether this weakness was temporary or not.”

“Let’s start with the most important figure, registered unemployment out 10.00 at Friday. In July registered unemployment increased by 3000 person. Contrary to the trend of a monthly fall by 500-1000 persons and contrary to Norges Bank’s forecast.”

“The labour market officials (NAV) said the rise was partly due to new registration routines and partly a change in the timing of measurement. Norges Bank bought that explanation at the last meeting and so do we. But the August figure will indicate whether we are right to do that.”

“The effect of the timing should be reversed in August and that is why we expect unemployment to fall by as much as 3000 persons. The level will still be slightly above Norges Bank’s forecast.”

“We are less concerned about the retail sales figure out at Thursday.”

“Our forecast is 0.3% m/m while consensus is 1%. Our forecast means that retail sales will be 0.3% below July last year compared to an average growth at 1.4% y/y so far this year.”

“With continued strong growth in the economy and healthy growth in employment we are rather relaxed about some noise in retail sales.”