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Fast Comment NorwayPreview: Labour market figures and retail spending

  1. Unemployment trending lower on the back of still-solid employment growth
  2. Retail sales probably declined in May...
  3. ...but owing to a solid gain in April, the trend is still positive
Unemployment trending lower on the back of still-solid employment growth
Next week we will see figures for survey unemployment in April (three months of March-May) and registered unemployment in June, on Wednesday and Friday respectively. In addition, on Thursday we will see figures for retail spending in May. Starting with the labour market, near-term employment signals are still strong, as suggested by the latest report from Norges Bank’s Regional Network. Currently, overall employment growth is exceeding the growth rate for the working-age population. This will continue to push unemployment lower, as the labour force participation rate has recovered from its cyclical drop during the oil crisis. Note, however, that we expect to see an unchanged reading next week, with the LFS unemployment rate at 3.5 percent. This follows a sharper drop in March, where the LFS unemployment rate fell by 0.3 percentage points. The upshot is that the trend is still downward. Turning to registered unemployment, May saw a modest increase in the number of people registered as fully unemployed. That outcome was not a big surprise to us as April had seen a sharp drop in unemployment that was, according to NAV, partly driven by calendar effects. On net, however, registered unemployment has continued to decline over the past couple of months. For the upcoming week we expect to see an unadjusted unemployment rate of 2.1 percent, which gives a seasonally adjusted rate of 2.2 percent, slightly down from 2.3 percent in May.
Retail sales probably corrected down in May, but trend still positive
Finally, retail spending increased by 1.8 percent in April, well above market expectations. The stellar increase came after several weak months that we had (at the time) struggled to square with the solid fundamentals. Given the solid rise in April, we can finally say that the trend in retail spending has turned upward again. Spending is supported by growth in real disposable incomes, which are currently rising on the back of solid employment growth as well as real wage gains. Having said that, the monthly retail data are highly erratic. As a result, we expect to see some downward correction again in May, of -1 percent m-o-m. Again, the net result will be positive for the past couple of months, pointing to a solid gain in Q2 as a whole.


Marius Gonsholt Hov

Senior Economist


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