Norway: The economy expands at an accelerated pace in May
Economic output increased 0.4% in May compared to the previous month in seasonally-adjusted terms, up from April’s revised 0.3% increase (previously reported: +0.2% month-on-month). In the rolling quarter March–May period, the total economy recorded an expansion of 0.4% from the previous quarter, up from February-April’s revised 0.1% increase (previously reported: flat growth).
Mainland GDP—which excludes hydrocarbon extraction activity and related transport—expanded 0.3% in May from the previous month in seasonally-adjusted terms, down from April’s revised 0.4% expansion (previously reported: +0.3% month-on-month). In March–May, mainland GDP jumped 0.7% from the previous rolling quarter, up from 0.4% in February–April.
In May, private consumption fell 0.1% in seasonally-adjusted month-on-month terms, up from the 0.5% decrease recorded in April. These two months of declining consumer spending followed a sharp increase in March, so a high base effect that month seems to have weighed on the expenditure category’s consequent growth. The unemployment rate actually fell to 3.2% in April, the most recent month for which data is available, marking a near seven-year low.
Government consumption, meanwhile, rose 0.1% in May, contrasting the 0.3% fall in April. Fixed investment rose 4.2% in May, down slightly from the 5.8% increase in April. Investment was particularly strong in the mainland economy in May. The external sector had a rocky month in May, as export growth was flat, down from April’s 1.5% increase, while imports fell 1.8%, contrasting April’s 1.3% rise.
In terms of the outlook, the economy is seen accelerating in 2019 versus 2018, as it benefits from strong hydrocarbon investment, while average wage growth is expected to outstrip inflation, supporting private consumption. The government also expects its budget for the year to be marginally simulative to the economy. The main downside risks to growth come from global trade protectionism, Brexit and a slowdown in Europe.