• Regional network indicates GDP growth clearly on the weak side to Norges Bank’s view
• Share of businesses reporting capacity constraints drops
• Weakness most visible in the construction sector and retail trade
• Registered unemployment increased, but within Norges Bank’s view
Norges Bank’s regional network report signals a slowdown and a growth clearly on the weak side to Norges Bank’s view. The most significant drop in growth is seen in the construction sector, domestically oriented industry and retail trade. Oil industry suppliers also report somewhat lower growth. The export industry and household services on the other hand report somewhat higher growth.
Also important to Norges Bank is the lower share of businesses reporting capacity constraints. This is key information to Norges Bank’s judgement on the pressure in the economy and today’s report signals less pressure.
Registered unemployment increased by approximately 600 persons, more or less in line with what we expected. This increase in unemployment is well within Norges Bank’s forecast.
Today’s key data point to a high probability that Norges Bank will revise down not only its judgment of the pressure in the economy now, but also its forecast for growth and pressure in 2014. This will have an isolated negative effect on the new rate forecast to be published by Norges Bank next Thursday. Regarding other factors we have inflation and rates abroad which also pull the rate forecast down, while the weak NOK pulls upwards. We doubt the network report was weak enough to bring a rate cut next week, but we believe the future rate path will be revised down somewhat.
Details:
• Regional network growth indicator reported at 0,66 in Q4, i.e. a GDP growth of 0.3-0.4% k/k compared to Norges Bank’s forecast of 0.6% q/q
• Registered unemployment (unemployed and people on labour market measures, s.a.) increased to 89,645 persons in November from 89,089 in October. Nordea forecast was an increase on 800 persons.
Nordea