Bloomberg News

Norway Credit Growth Accelerates, Unemployment Declines

September 30, 2011

(Updates with economist comment in fourth paragraph.)

Sept. 30 (Bloomberg) -- Norway’s household credit growth accelerated at the fastest pace in almost three years in August and registered unemployment fell more than forecast this month, putting pressure on the central bank to resume tightening.

Household debt grew 7.2 percent in August from a year earlier, the most since November 2008, the Oslo-based statistics agency said today. The Labor and Welfare Organization said registered unemployment fell to 2.5 percent in September from 2.7 percent in August. Economists estimated unemployment would fall to 2.6 percent, according to the median of 10 estimates.

The economic data cause a “dilemma” for Norges Bank, which in August postponed plans to raise its benchmark from 2.25 percent and this month signaled it may not resume tightening until 2012 as a sovereign debt crisis in Europe and a strengthening currency threaten exports, according to Nordea Bank AB economist Katrine Boye.

“The mainland economy is doing quite well at the moment and you have house prices rising and credit growth increasing slowly, that is where the debt burden is high,” Boye said.

The krone fell 0.2 percent to 7.8949 per euro by 10:59 a.m. Against the dollar it lost 0.6 percent to 5.8298.

Norway’s $524 billion sovereign-wealth fund has so far shielded the country from the worst of Europe’s debt crisis. Low borrowing costs have encouraged household to take on debt and invest in property. House prices gained an annual 9.4 percent in August, adding to an 8 percent rise last year, according to data from Norway’s Real Estate Brokers Association.

The risk of the development of a housing bubble prompted Norway’s Financial Supervisory Authority this week to suggest stricter mortgage lending guidelines for banks.

The central bank estimates consumer debt burdens will grow to more than 204 percent of disposable income next year, the highest since at least 1988.

--Editors: Jonas Bergman, Tasneem Brogger

To contact the editor responsible for this story: Josiane Kremer at

To contact the editor responsible for this story: Tasneem Brogger at

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