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Fast Comment NorwaySurvey unemployment pulled down by a sharp drop in the labour force

  1. LFS unemployment down to 3.2 pct in April, expected 3.5 pct
  2. Details less impressive: The latest decline explained by a sharp drop in the labour force
  3. Probably due to noise; we pay more attention to the registered figures, due this Friday
LFS unemployment down to 3.2 pct in April, but details less impressive
According to survey data, overall unemployment fell sharply to 3.2 percent in April (three months of March-May), following 3.5 percent in March. Both we and consensus had anticipated an unchanged reading at 3.5 percent. The details were far less impressive, however. This because the latest unemployment drop was explained by another decline in the labour force participation rate, and thus the labour force. According to Statistics Norway, the labour force declined by 7000 people in April, whereas employment was little changed. Thus the number of unemployed people declined by 7000 as well. We do not believe that the labour force participation rate has started to shrink from current levels. Going forward we instead expect to see some upward correction again. Something which, in isolation, will dampen the further downtrend in unemployment; in the near-term, we may even see some months with upward corrections to the unemployment rate. Through the volatility, however, we believe survey as well as registered unemployment will trend a bit lower this year, on the back of rising employment. But the most recent decline in overall unemployment, as suggested by the survey data, looks artificially steep. We pay more attention to the figures for registered unemployment, which are less plagued by sampling error. Registered unemployment for June is coming up this Friday. And here we expect to see a more modest decline in unemployment, relative to the latest and steep decline in survey unemployment.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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