Norway: Lower Oil Output in April Mars Otherwise Favourable Activity Data; Stronger Sales and Borrowing and Rising Inflation Pressures Signal Higher Rates Very Soon

Summary

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Notwithstanding lower oil production, attributed to maintenance, the past month has been favourable for the economy. Business remains optimistic about future prospects, with industrial output data supporting this optimism, registered unemployment fell to a five-year low and retail sales rose. On the other hand, prices - for houses in particular, but for consumers and producers in general - also rose, as did borrowing, fuelled by non-financial corporations but consumers also played a major role, and it is not a question of if rates will rise but when the next increase will be. Following the June Inflation Report is considered marginally more likely, but there is still a possibility that the Norges Bank will raise rates at its 31 May meeting.

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Norway: Lower Oil Output in April Mars Otherwise Favourable Activity Data; Stronger Sales and Borrowing and Rising Inflation Pressures Signal Higher Rates Very Soon

Lower oil output last month, but other data favourable...

April saw a 9% fall on the month in Norway's oil output to its lowest for twelve years. The official reason was routine maintenance work, and the decline was partly offset by a 3% rise in the (much smaller) production of natural gas liquids and condensate, but the news will have caused a slight frisson of concern for a government that enjoyed a 14% rise in revenues last year largely thanks to higher oil prices.

But th...

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