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Fast Comment NorwayRegional Network: Solid near-term momentum, rate hike from Norges Bank next week

  1. Regional Network: Solid near-term momentum, revised higher since the previous round
  2. Petroleum investments and public spending boosting growth
  3. Underlines Norges Bank's case for a rate hike next week
Petroleum investments and public spending boosting growth
According to the contacts in Norges Bank’s Regional Network, growth signals have strengthened for the near term. Output growth over the next six months is now reported to be closer to 0.8 percent q-o-q, up from a solid 0.7 percent reported in the previous round (February). Output growth is in particular boosted by rising petroleum investments, and thus the strongest output signals are among the supplying industries. Purchases of technology-related services and large-scale public investments are other strong growth contributors. Owing to the elevated growth rates, overall capacity utilisation is increasing further and labour shortages are becoming more prominent. Prior to today’s release, we had argued that the overall momentum of the economy was holding up firmer than indicated by other surveys. But still, the outcome was stronger than we anticipated. This underlines Norges Bank’s case for a rate hike next week. And in isolation, it also suggests some upward revision to the shorter end of the rate path. Other arguments have weakened, however (e.g. the latest inflation print). But, in our view, at this stage Norges Bank is primarily focused on the growth outlook, which is firmer than expected. We will send out a detailed preview on Norges Bank by the end of this week. But to keep it short, we expect a rate hike at the upcoming rate meeting, and we also expect Norges Bank to signal another rate hike during the second half of the year.


Marius Gonsholt Hov

Senior Economist


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