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Fast Comment NorwayPositive trend in manufacturing; the outlook remains bright, supported by rising petroleum investments

  1. Manufacturing output up by 1.5 percent in October; better than expected
  2. Consensus expected 0.8 percent; we had forcast 1 percent
  3. Manufacturing output has pulled up by 1 percent over the past three months
Manufacturing output up by 1.5 percent in October; better than expected
Manufacturing output rose by 1.5 percent in October, following -0.3 percent in September. The outcome was better than expected; consensus expected 0.8 percent rise, while we had forecast 1.0 percent. Through the volatility, manufacturing output has pulled up by 1 percent over the past three months, which again underlines the general upward trend, supported by the ongoing rise in the building of ships and platforms. The outlook remains positive, as supply industries have recently lifted their growth estimates for the coming six months (cf. Norges Bank’s Regional Network), a reflection of the forthcoming rise in petroleum investments throughout 2019. The near-term outlook for the real economy remains robust enough for Norges Bank to raise the policy rate a little further. Recall that the September policy rate trajectory implied two interest rate rises each year in 2019-21, with the policy rate rising to 2.25 percent toward the end of 2021. The new rate path (due next Thursday) will indicate that the two planned hikes in 2019 remain in place, in our view. Further ahead, however, we believe the central bank will lower its projection for the policy rate. As we see it, Norges Bank will now signal that one of the planned rises in 2020-21 will be cancelled so that the policy rate lands at 2.0 percent by the end of 2021. For further details, see our separate Macro Comment “Norges Bank set to lower its policy rate path again.”


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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