– Could be critical for Norges Bank – E24

This week, the US will provide an update on price growth and the labor market. According to economists, these will provide very important signals for the additional interest rate path.

– This is the big inflation week this month. In short, these numbers could be decisive for Norges Bank’s interest rate path, says Kerry M. Knudsen, chief economist at Sparebank 1 SR-Bank.

Inflation figures from both the European Union and the United States will be released on Thursday.

Knudsen explains that inflation in the European Union affects the path of the Norwegian interest rate both directly through imported inflation – we import a lot from the EU – and indirectly through potential moves in the interest rate market.

Also when the US shows inflation for the month of July later in the day, it could affect interest rates with longer maturities, and not the least, it will have an impact on what the US central bank (Fed) chief decides at the next interest rate meeting in 2019. . September.

– And this has direct consequences for Norway, says the chief economist.

Important major numbers in the United States

Sarah Midtgaard, chief economist at Handelsbanken, says Friday’s “payroll,” key stats for the US labor market, will be essential.

She points to Fed Chairman Jerome Powell last week referring to the labor market as “very tight” and inflation as “very high.” Unemployment is now expected to remain unchanged.

– It appears that the US labor market is very resilient, despite the high interest rates. If the Fed sees no signs of slowing down, says Midgaard, further hikes may be needed.

The key interest rate in the US is between 5.25% and 5.0%, the highest in 22 years, and the question is whether the interest rate has peaked or not.

New wage statistics next Friday will also be able to help determine the answer.

Monthly growth in hourly wages has been at fairly high levels in recent months. It is expected to drop slightly to 0.3 percent, but in this case it would mean 3.6 percent year on year, which is far from in line with the Fed’s inflation target of 2 percent, says Midtgaard.

This week’s inflation and labor market numbers will be important pieces in the monetary policy puzzle for Powell, the chief economist sums up.

Surprisingly, people spend

Here at home, the week kicks off with Statistics Norway’s July retail sales figures. The question is when are we going to see people really tighten up, according to Kerry M. Knudsen, chief economist at Sparebank 1 SR-Bank.

I am constantly amazed that people’s spending is still holding up so well, despite all the jumps in interest rates.

It is expected that we will witness tightening during the fall season, especially in large purchases.

Midtgaard says Handelsbanken expects a 1% drop, but he doesn’t think this will prevent Norges Bank from raising interest rates in September as well.

Expect weakness in the labor market

On Friday, the Nav Unemployment figures will be released.

“Everyone expects the labor market to weaken in Norway,” says Knudsen. It is a real irony that this has not happened yet, says the chief economist.

The economic laws we know say that a slowdown in the economy usually means an increase in unemployment. The fact that this is not happening now is linked to the fact that there was an unmet need for labor a long time ago, according to Knudsen.

– The question is whether this will continue. The unemployment numbers released by Nav are of course an important number when Norges Bank sets the interest rate path, but there is often a lag in these numbers.

He says the Nav layoff numbers are a better indicator, but they haven’t seen big results here either.

– I’m particularly excited about building. This is where we would expect to see a pullback first, and we have seen small signs already.