Norwegian retail sales drop in December

Norway’s retail sales came in weak in December. The retail sales index dropped 2.1 percent sequentially in December from the rise of 0.2 percent recorded in November. Most industries saw a drop in retail sales volume in the month. Sales in grocery stores and particularly with sales of food and beverages added to the decline. Working-day adjusted figures indicated that the trading volume of retail sales dropped 0.7 percent in the fourth quarter on a year-on-year basis. For the whole of 2016, the volume of retail sales fell 1.5 percent year-on-year.

Household spending on goods dropped 1.7 percent sequentially. There was a fall in all commodity groups, excluding the purchase and operation of vehicles. Consumption of electricity and fuels declined 10 percent in December and added to pushing down commodity consumption by just under 0.8 percentage points. In spite of the decline in December, household consumption in the fourth quarter was 0.6 percent higher than in the third quarter. This is because of the growth in the earlier months.

Consumption figures are expected to have been impacted by “Black Friday”, where consumption was moved from December to November. This is also consistent with Sweden’s figures. However, unlike Sweden, consumption growth in November was not strong that indicated moderate “Black Friday” effects.

In all, the figures are on the subdued side. Especially consumption figures imply a subdued beginning in 2017 and suggest that the Norwegian central bank’s projections for consumption in 2017 is on the positive side, said DNB Markets.

“In isolation, this will contribute to lower interest rate path, but Norges Bank will also receive the January index before the next meeting. Continued solid growth in the housing market will probably work as an effective barrier against further rate cuts”, added DNB Markets.