Status updated.
On Thursday morning, the first regional network report for the year came from the Bank of Norway. There are many indications that companies are more positive about the future.
Since the last survey, the percentage of companies reporting staffing problems has decreased significantly, and there are also fewer companies limited by capacity problems. They also expect that activity to level out, and for development to be stronger than in the previous survey.
Overall, corporate profitability is a little better than it was a year ago, but costs are still going up a lot. So the majority will raise retail prices a lot in the first half of the year.
It may give a higher peak interest rate
Nordea economists Dane Cekov and Kjetil Olsen write that the report indicates that activity in the Norwegian economy is expected to hold up better than the Bank of Norway expected, while at the same time price pressure may intensify.
– This means that the price pressure we have seen in the Norwegian economy is not over yet and may already be getting worse. This is putting pressure on Norges Bank, Cekov and Olsen write.
Economists say today’s report sets the stage for a 0.25 percentage point rate hike next week and a hike in interest rates.
Kjetil Martinsen, chief economist at Swedishbank, believes the report indicates that pressure in the economy is easing. He wrote that although the current trend is higher than what the central bank had projected in December, the survey is more in line with the Bank of Norway’s view over the medium term.
– Activity is expected to remain unchanged in the next quarter, in contrast to the previous survey, Martinsen wrote. He adds that cost pressures increase from the last quarter of last year to the first quarter of this year, but they flatten out more in the following quarter.
It is important that there are signs that capacity problems will subside further, which in turn means less cost pressure in the medium term. While the momentum today is higher than Norges Bank predicted in December, we’ve read this survey as more in line with Norges Bank’s medium-term view.
The regional network is a survey conducted by Norges Bank, in which hundreds of companies and organizations across the country are asked about their economic development and future prospects. Already when the previous report was published in June, slower growth and higher prices were expected.
The background to Thursday’s report is still high inflation and headline numbers pointing to interest rates continuing to rise.
This report came exactly one week before Norges Bank’s next interest rate announcement, when another 0.25 percentage point increase is expected.
Higher wage growth
In general, companies expect much higher wage growth this year than they predicted in the December survey. Now they expect a wage increase of 4.6 percent.
In the survey, companies seem to primarily cite higher costs of living and higher salary expectations, as well as lower unemployment. But early next year, they expect price inflation to slow, which will contribute to lower wage growth. Companies estimate wage growth of 3.9 percent in 2024.
violent
Prior to the regional network report, there were extreme market volatility caused by two bank failures in the United States. On Wednesday, things went badly on the Credit Suisse stock exchange.
Several economists say that today’s report from the regional network comes in light of the turmoil that has characterized the market this week.
The reason for the huge drop in rates was two words from the head of the National Bank of Saudi Arabia, the largest owner of the Swiss bank. In an interview with Bloomberg on Wednesday morning, he said it was “not at all appropriate” to put more money into Credit Suisse.
The day before, it had also become clear that PwC’s auditor had found “significant weaknesses” in its financial review of the bank, which led to the postponement of the annual report.
The clear response from the Swiss National Bank led to Credit Suisse having to go to the Swiss Central Bank for help. They also got that, in the form of 50 billion Swiss francs, which is about NOK 575 billion, to “guarantee the bank’s liquidity”.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.
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