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Norwegian retail sales grow sequentially in April
Norwegian retail sales grew 4.8 percent sequentially in April, adjusted for normal seasonal variations. Consensus expectations were for a fall of 0.9 percent. The goods consumption index, which also includes car sales, fuel and electricity and correlates more with goods consumption in the national accounts, rose 2.5 percent sequentially in April after falling 4.1 percent from February to March. Goods consumption is around 42 percent of total private consumption in the national accounts.
The underlying pattern is that goods typically linked with home improvement, furniture and sports equipment have risen. This is a direct reflection of how the Norwegian society has been in lockdown, noted DNB Market Research in a report. On the negative side were retail sales at gas stations, which dropped because people were traveling around a lot less than before.
The sharp rise also shows two significant factors about the underlying economic conditions in Norway. Households in the nation have not yet seen a sharp decline in income, even if they are temporarily laid off, and therefore there is still purchasing power and demand present to underpin the restart of the economy. And secondly, households’ willingness to spend underpins the economy in the phase of reopening.
“Even when service consumption is unavailable, the rise in retail sales indicates that the Norwegian system providing massive income security ultimately leads to greater demand. This is in contrast to the development that we have seen in the Eurozone, where there was a much larger fall in March compared to Norway. As the reopening gradually continues and more goods in the consumption bundle become available, there should be gradual return to regular growth also in retail sales”, added DNB Markets.