Mainland GDP was stronger than expected. Underlying growth was stronger than expected by Norges Bank. There is not yet any signs of oil related weakness in the economy
Mainland GDP grew by a healthy 0.4% (2.7% y/y) in Q3 after the very strong Q2 at 1.2% (not revised). Electricity production pulled down by 0.2% points so mainland growth is 0.6% when excluding electricity production. This is the figure Norges Bank follow closely and we guess Norges Bank’s estimate was 0.4%. So the figure was on the strong side to Norges Bank’s forecast.
Looking at the production side the figure was generally strong apart from the expected correction down in electricity and agricultural/fishery sector. The main surprise for us this time was that production in the retail sector increased despite a drop in consumption of goods. Looking at the demand side the main weakness we could find in today’s figure was consumption of goods which fell. But that was known from retail sales. There was also a small drop in housing investment, but that is soon history.
The picture of the current situation in the Norwegian economy is on the strong side to Norges Bank’s view. If anything this points to a higher interest rate path (all else equal). But do not forget that the expected drop in oil investment has not yet started. Consumption of goods must also pick up for growth to continue at the current trend. The Norges Bank Q4 business survey (28 November) will be important for the coming interest rate forecast.
Nordea