Norwegian employment likely to rise moderately, registered jobless rate to be stable

The Norwegian labour market is rebounding. The rise in LFS jobless rate has been reversed to a greater degree already. Meanwhile, registered jobless rate has been stable relatively for some time. In 2016, employment grew moderately, pulled by construction and public sector. On the other hand, manufacturing employment, especially oil exposed, dropped.

A moderate rise in employment is expected, while registered jobless rate is likely to be stable, stated DNB in a research report. Growth in construction and public sector is likely to reduce; however, the labor market is expected to meet less negative drag from oil related industries.

Meanwhile, inflation has decelerated earlier than projected. The country’s core inflation is expected to come to 1.6 percent this year, added DNB. Wage growth was very low in 2016 and was partially because of structural changes. It is likely to increase in line with 2017’s agreed benchmark.

In March, the Norwegian central bank, Norges Bank maintained its rate path with a considerable possibility of a rate cut, but with hiking rates in 2019. Despite stabilizing home prices, growth in credit is likely to stay high, while policy rates are already at quite a low level.

“We think this will be a solid threshold against further cuts. We think the outlook for low inflation, stable European policy rates (despite the re movement of the unconventional low rates), gradually stronger NOK and a slowdown abroad in 2019/2020 are arguments for not hiking rates”, stated DNB.