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Fast Comment NorwayManufacturing output up 1.5 percent q-o-q; adding significantly to growth

  1. Manufacturing output rose by 0.5 percent in December; up 1.5 percent in Q4 2018
  2. Adding significantly to growth; preliminary GDP figures are due tomorrow
  3. Bright outlook for manufacturing in 2019, although we expect to see a slowdown from 2020
Manufacturing output rose by 0.5 percent in December; up 1.5 percent in Q4 2018
Manufacturing output rose by 0.5 percent in December, following a flat reading in November. Thus the outcome landed in the middle of expectations: consensus expected 0.3 percent growth in December, whereas we had anticipated 0.8 percent. The quarterly growth rate landed at 1.5 percent in Q4 and thus added significantly to the GDP growth rate. Note that preliminary GDP data is due tomorrow, and general expectations are for a solid bounce-back (following a temporary slowdown during Q3). Consensus has pencilled in quarterly GDP growth of 0.8 percent q-o-q, whereas we have 0.9 percent. In both cases these estimates are slightly above Norges Bank’s short-term estimates, where the mainland economy is expected to hover around 0.7 percent. However, Norges Bank has already addressed some upside risk to this estimate. Digging a bit deeper into the manufacturing details, the petroleum sector (building of ship platforms) added significantly to growth toward the end of 2018. And we expect robust growth across these industries in 2019, driven by a sharp rise in petroleum investments. That said, we expect a sharp slowing of GDP growth beyond this year, as the petroleum sector will yet again become a drag on growth at the same time as the global economy slows. The Norwegian Petroleum Directorate has already flagged falling petroleum investments from 2020 and beyond. In the near term, the outlook remains solid enough for Norges Bank to continue to hike its policy rate this year. We maintain our call for two rate rises this year (March and September).


Marius Gonsholt Hov

Senior Economist


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