● July retail sales probably weak due to unusually nice weather
● Registered unemployment slightly up, LFS unemployment down
● In total only slightly weaker than expected, i.e. no change in view on Norges Bank
Today’s key figures from Norway were mixed with retail sales and registered unemployment weaker than expected and LFS unemployment stronger than expected.
Retail sales dropped by 1.3% m/m (s.a) in July. We had expected a weak figure due to the unusually nice and warm summer weather in July, which we believe made people stay away from the shops. The details on the consumption of goods indicator also point in that direction with consumption of food increasing 0.6% m/m while other goods dropped by 3.2%. Also purchases of cars were very weak in July. The effect of the weather should be temporary and we believe we will see a rebound in retail sales the coming months.
Unemployment figures showed an increase in registered unemployment in August, while LFS unemployment dropped in June (average May-June-July). The unemployment figures have until today been slightly better than Norges Bank’s forecast in the June report. After today’s data it now looks like registered unemployment is in line with Norges Bank, while LFS is significantly lower (3.3% against Norges Bank’s forecast of 3 ¾% in 2013). In total, we would say unemployment figures are more or less in line with Norges Bank.
The data were mixed, but due to some temporary weakness in retail sales and unemployment figures roughly in line with Norges Bank, we find no reason to change view on Norges Bank. August inflation data due 10 September will be crucial. We expect another high figure and that together with the weak NOK will make Norges Bank revise up its rate forecast.
Details
Retail sales: -1.3% m/m in July after -0.2% in June. Consensus 0.2%, Nordea -1.0%.
Registered unemployment: Up 600 persons to 86,592 from 85,969 (revised up by 200 persons, s.a. and including people on labour market schemes). Consensus 86,000 and Nordea 85,800.
LFS uemployment: Down to 3.3% in June from 3.2% in May. Consensus and Nordea 3.4%
Norges Bank’s FX purchases will be reduced to 100 million per day in September from 200 million in August.
Nordea