(Bloomberg) -- Norway’s adjusted unemployment rate rose to the highest level since 2022 last month, exceeding the central bank’s estimate and raising the odds of an interest-rate cut before next year.
The seasonally-adjusted registered jobless rate for July increased to 2.1%, the highest level since January 2022, data from the Norwegian Labor and Welfare Administration showed on Friday. Norges Bank had projected that unemployment would remain at 2% until September.
The data suggests the effects of monetary tightening by the central bank are feeding through to the Norwegian labor market, which has held up better than expected by policymakers even as the energy-rich economy has been nearly stagnant since last year.
A weakening labor market, along with slowing inflation, could prompt the central bank to reconsider its plans to keep borrowing costs steady until the start of next year, although the recent slide of the Norwegian krone suggests any easing remains distant. The currency has lost more than 4% of its value against the euro since the beginning of June, raising concern that higher prices on imported goods will limit any further drop in inflation rates.
“Today’s slight upside surprise should provide some assurance to Norges Bank that the economy is beginning to show signs of deceleration, making a December rate cut a likely scenario and an early Christmas gift for the Norwegian population,” Marthe Enger Eide, macro strategist at SEB AB, said in a note to clients.
--With assistance from Barbara Sladkowska.
(Adds analyst comment in fourth paragraph.)
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