Nordea Markets

Oil prices move moderately higher in the short term, but will gain strength with renewed momentum in the world economy.

Development of Iraqi oil industry essential to meet future oil demand.

Global oil demand will accelerate again in 2011 in line with the pick-up in world economic activity.
Last ned rapporten

July retail sales surprised on the upside with a solid growth of 1.4% m/m against the consensus estimate of +0.3% (Nordea +0.4%). Consumption of goods (includes cars and electricity) was also up (0.7% m/m).

This was a pleasant surprise. Retail sales have been very weak so far this year and much weaker than Norges Bank’s expectations. Finally came the long-awaited rebound. But still, it is only one positive figure and we need extremely strong growth the rest of the year to get close to Norges Bank’s forecast of 3.5% growth in consumption in 2010.

Credit growth more or less as expected with total credit growth unchanged at 4.7% y/y (consensus 4.8%, Nordea 4.7%). Details: A marginal drop in household credit growth from 6.2% y/y to 6.1% and a marginal increase in corporate credit growth to 0.6% y/y from 0.5%. Probably well in line with Norges Bank’s view.

The Labour Survey (LFS) unemployment rate in June was 3.5 % compared to 3.6% in May. Consensus was 3.6% while Nordea forecast was 3.7%. Employment grew by 9 000 persons from May to June.

There is a lot of noise in the LFS figures so one should not do too much out the drop from in the unemployment rate from 3.6% to 3.5%. Still if one look at the trend it is somewhat stronger than Norges Bank forecasts implies. Unemployment seems to have stabilized at 3.5% while Norges Bank had expected it to reach the top at 3,75 % at the end of the year. Add to this that last months have shown a rather strong turnaround in employment and the conclusion will be that today’s figure, if anything, was somewhat on the strong side.

Erik Bruce
Chief Analyst
Economic Research

There was healthy growth in mainland demand despite a drop in private consumption. Both mainland investment (private and public) and public consumption grew strongly. Inventories also contributed. A very strong drop in net (mainland) exports dampened the impact on GDP.

Manufacturing, construction and services industries excluding the retail sector grew rather healthy q-o-q, while production in the retail sector and the electricity sector fell. Electricity production dragged down GDP growth by 0.3% points.

Erik Bruce
Chief Analyst
Economic Research