(Bloomberg) -- Norwegian companies expect business activity to increase “somewhat” through the rest of the year, according to a key survey of corporate sentiment that is likely to cool bets that the country’s central bank will embark on monetary easing before year-end.
Output is projected to grow by 0.2% in the third quarter, versus an 0.3% expansion expected in June, as prospects have weakened for the construction and retail sectors, Norges Bank said on Thursday, citing its regional network contacts. With respondents from other industries seeing higher activity, the economy is forecast to keep that pace in the final quarter of the year.
The outcome adds to recent evidence of relatively robust labor and housing markets, which have kept Norges Bank’s officials more cautious than the Federal Reserve and the European Central Bank about reversing post-pandemic tightening. Policymakers have also been restrained by the weak krone, which boosts uncertainty about imported inflation.
The data provides the last key input before Governor Ida Wolden Bache and other rate-setters are due to meet next week, when most economists expect the policymakers to signal the first reduction from a 15-year high of 4.5% in December.
While respondents kept their forecasts for wage growth of 5.2% this year and 4.3% in 2025, the report said that capacity utilization is “slightly higher than in the previous survey and slightly more enterprises report labor shortages.”
“The key concern for Norges Bank back in June was that capacity utilization was picking up, which could indicate more sticky domestic inflation. In this report capacity utilization continues to rise, which is a surprise,” said Kristoffer Kjaer Lomholt, head of FX and corporate research at Danske Bank A/S. “This could very well mean that Norges Bank will not open the door for a rate cut next week – at least not to any meaningful extent.”
--With assistance from Joel Rinneby.
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