This week there have been several figures showing how oil slump hit the Norwegian economy and affecting increasingly more Norwegian lives:
Yesterday figures from NAV show that unemployment rose by 2,500 people. It is the biggest rise in unemployment in a single month in six years.
Thursday came figures showing that industrial output falls. The decline was greatest in the oil services industry but also other industries know the downturn.
Oil downturn seems, however, still does not seem to dampen the desire to buy the people. Retail sales rose 1 percent from May to June, helped by poor summer weather, according to Statistics Norway.
– yet we see little brake in the economy outside the oil related. But I think there is a risk that we may soon see it, says chief economist Harald Magnus Andreassen in Swedbank.
Can affect consumption
He points out that the Norwegian economy is not particularly well-balanced , with high house prices, high housing and high debt among households.
– When total economy goes the other way, are several areas at risk, as consumption and housing investment, he said.
After an increase in our oil price in recent weeks fallen again down towards the low levels of last winter. Friday afternoon was the oil price $ 52.6, exactly half as high as it was a year ago. Several oil analysts now believe that prices will remain at a low level longer than they expected just a few months ago. Thina Saltvedt of Nordea downgraded this week its forecast for the average price for the second half from 67 to 64 dollars a barrel. For next year, she has revised down the average price of $ 75 to $ 72.
Belief in permanently lower prices
The oil economist Torbjorn Kjus in DNB Markets says he’s going to adjust their oil price estimates in a report next week but will not say how much. He says reduced costs in the oil industry and increased production from OPEC countries, combined with lower demand from countries such as China forward, will dampen oil prices.
– We get another year with low prices until we get any meaningful improvement, said Kjus.
He does not think oil prices will come back to the last years’ high levels above 100 dollars a barrel.
Andreassen mean longer with lower oil prices increases the risk that oil downturn will soon frame wider.
– The housing market and consumption are obvious risk factors. Norwegian households have not so much money, and many have lived well in taking up more loans on the house. There is no good way to finance themselves over time, Andreassen says.
Unemployment rises
NAVs June figures show that unemployment is now at its highest recorded level since the financial crisis. 3.1 percent of the workforce is completely free, compared with 3.0 percent in July last year. If we include the figures for jobseekers in measures, the overall unemployment rate 3.4 percent.
According to NAV, unemployment rose most for brokers and consultants, followed by occupations in agriculture, forestry and fisheries and child and youth work. The largest decrease in unemployment was within academic careers in health care, and caring professions and in teaching professions.
– Employment has long lagged behind the growth in population. Recessions in China, a falling oil price and Greece crisis has heightened uncertainty in the labor market. There is therefore a risk of further increases in unemployment, says chief economist at LO, Stein Reegård.
SSB forecasts estimate that we expect that unemployment will peak at 4.3 percent in 2016.
Slightly lower wage
The growth of an average annual salary was 3.1 percent in 2014. SSB’s forecasts predict a further decline in wage growth, estimated at 2.8 percent in 2015. According to SSB contributes the increase in unemployment that wage growth is weaker.
– Wage growth is negatively affected by a low oil price, because oil is our largest export industry, says chief economist at LO, Stein Reegård.
On the other hand strengthened ability to pay in other competitive industry, due to a stronger krone. In sum, we expect that wage growth for 2016 will be quite similar wage growth for the current year. SSB forecasts for 2016 show a slight increase in wage growth, to 3.0 percent.
More rate cuts in store
Governor Øystein Olsen sat in June rate down 0.25 percentage points to 1 percent . It is the lowest level ever in Norway. He also announced that there could be more rate cuts to fall, partly because unemployment rises. Yesterday’s unemployment figures from Nav, at 3.1 percent, was even weaker than Norges Bank assumed in June. Increased unemployment makes several economists now expect that Norges Bank will cut interest rates earlier than expected.
chief economist Harald Magnus Andreassen in Swedbank think interest rate cut could come as early as September, and does not exclude that there might be even more cuts.
– Unfortunately, I think it may be necessary to cut more, because there are signs that it does worse in the economy and that more unemployed, he said.
This is good news for people with high mortgages, but bad news for those who have money in the bank. The lowest mortgage rates are now around just under 2.5 percent, according to the Financial Portal.
Do housing prices can stand
For the Norwegian housing market as a whole has the major impact from oil downturn absent, even the hard-hit counties Rogaland has been feeling the effects of the oil price crisis in this area.
Dnb has predicted a fall in house prices next year, but do not get support from the chief economist of Economic Analysis, Roger Bjørnstad.
– Paradoxically, probably housing market get a little lift, because low oil prices have contributed to decline in interest rates. But if the repercussions are large enough, and unemployment continues to rise, you can probably see negative effects in the housing market, says Bjørnstad to Aftenposten.
In Oslo shall be additional lot before house prices fall , says Chief Economist.
– In addition to low interest rates, has high population growth, low pace in residential buildings and few homes on the market in Oslo, he says.
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