Norway’s unemployment rate unexpectedly rose in June, the first increase since January, as Europe’s debt crisis weighed on hiring.
Registered unemployment rose to 2.4 percent this month, according to a statement from the Oslo-based Labor and Welfare Organization today. The median estimate of a Bloomberg survey of 12 economists was for an unchanged rate of 2.3 percent.
“The labor market in isolation suggests a higher interest rate than today’s level,” Swedbank First Securities said in an e-mail. “But a weak economic outlook among our trading partners outweighs this and puts a lid on the key policy rate for now.”
Norway’s central bank expects registered unemployment will average 2.5 percent this year, it said in its latest monetary policy report. Record investments by energy companies operating on Norway’s offshore oil and gas fields have sheltered the Nordic economy from the fallout of Europe’s debt crisis.
An improved economic outlook prompted policy makers to increase their growth forecast for the mainland economy, which excludes oil and gas output, to 3.75 percent this year from an earlier estimate of 3.25 percent.
Today’s higher unemployment figure is “probably not a trend,” Nordea Securities economist Erik Bruce said in an e- mail. “If we are right and this is not the start of an upward trend, it will matter little to monetary policy.”
Norway estimated investments in the nation’s oil and natural gas industry will rise 4.5 percent next year to a record as discoveries boost spending on exploration, Statistics Norway said earlier this month. Spending is estimated to rise to a record 194 billion kroner ($32 billion) next year, up from an estimated 186 billion kroner this year.
Consumer confidence in the world’s third-richest nation per capita rose to a 12-month high in the second quarter, while continued low borrowing costs have fueled real estate investments, leading to increased house prices.
Norges Bank, which has held its interest rate at 1.5 percent since March, signaled this month that it will start raising borrowing costs in the first quarter next year, earlier than previously indicated, as policy makers steer an accelerating economic recovery.
“Employment growth is high and is expected to increase at a slightly faster pace than labor supply, so that unemployment may be somewhat lower than previously projected,” Norges Bank said in its report on June 20.
The rise “could signal a slight shift in the labor market, but is in line with our view that the strong growth in employment will be more than offset by an expansion of the labor force,” Handelsbanken economist Ida Wolden Bache said in an e- mail. That may result in unemployment rising above Norges Bank’s forecast, she said. “For now, however, we think Norges Bank will maintain its view of the labor market.”
To contact the reporters on this story: Josiane Kremer in Oslo at email@example.com; Stephen Treloar in Oslo at firstname.lastname@example.org
To contact the editor responsible for this story: Jonas Bergman at email@example.com