Norges Bank’s survey shows strong growth in mainland, growth likely to be higher in 2018

The Regional Network, Norges Bank’s business survey, shows strong growth in the Norwegian mainland economy. The Regional Network shows growth at 0.6 percent sequential in the last three months, consistent with Norges Bank’s GDP forecast for the fourth quarter. The forward-looking indicator also continues to be strong and points at growth over the coming six months at 0.6 percent quarter-on-quarter, if anything on the solid side compared to Norges Bank’s forecast.

Most businesses saw stronger growth than in the August report; however, the construction sector has downwardly revised its outlook slightly because of uncertainty in the housing market. But overall this report points at stronger growth than the August report, stated Nordea Bank.

The unemployment figures released last week saw jobless rate dropping to levels in line with a closed output gap. This is slightly in contrast to the indicator for labor market pressure, which actually dropped a bit. This argues for Norges Bank to not lift its forecast for the output gap as much as registered unemployment indicates. But, the forecast for the output gap would still be lifted during its upcoming policy meeting. The indicator of capacity constraints in the Regional Network rose.

The Network highlights the view of strong growth in the economy, with restricted effects from the easing of the housing market, stated Nordea Bank. The report also affirms that the central bank’s fourth quarter forecast for GDP growth; however, the forward indicator implies growth would be higher in 2018.

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