The recovery of the economy slowed in July – E24

The GDP of the Norwegian mainland increased 1.1 percent in July after a 3.7 percent growth the previous month, according to Statistics Norway (SSB).

Despite the growth of the last three months, the level of activity is still 4.7% lower in July than before the corona crisis in February.

However, the agency recalls that July is a holiday month, which for some industries means low activity and for others high activity.

– It is difficult to say anything about the pace of economic recovery after the sudden stop in March and April based on the July estimate, and the figures should be interpreted with caution, says the head of the national accounts section, Pål Sletten.

In the second quarter, there was a historically high 6.3 percent drop in the continental economy.

It was the second consecutive quarter of decline, which means that Norway is officially in recession (economic recession). This is the first time since the financial crisis of 2009.

On average, economists had expected the growth rate to slow to 2.0 percent in July, but there was great uncertainty about the numbers, which now fluctuate more than usual from month to month.

Total GDP, which also includes oil and gas activities, also increased 1.1% after a growth of 3.1% in June.

Greater growth in accommodation and catering

The largest contribution to growth in July came from accommodation and catering activities, where there was an activity growth of more than 30 percent.

Accommodation statistics from Statistics Norway show that the number of overnight stays in hotels and camps in July was roughly normal, but with a clear shift from foreign to Norwegian guests.

Transport outside of foreign shipping also rebounded after rising just over two percent in July, especially driven by increased activity in air transport.

Activity in both business areas suffered a sharp drop in March and April. Despite good growth in the last three months, activity in the aforementioned business areas was still 20% lower in July than in February.

In business services, which include labor recruitment and travel agencies, there was a drop for the sixth month in a row after a drop of about 20 percent in July.

Health and care services also fell in July after returning to normal the previous month. Overall, service industries rose 0.8 percent in July, but activity was still more than 7.3 percent lower than in February.

Gross fixed capital formation increased 2.2 percent in July after falling 1.0 percent the previous month. The level of household investment in housing remained practically unchanged in June and July.

Exports of goods and services increased 5.6 percent in July and imports increased 4.4 percent. The increase in exports is mainly due to strong growth in crude oil exports, but also to traditional products. Pharmaceuticals, refined petroleum products and farmed fish contributed positively.

– Long before we’re fully on our feet again.

Handelsbanken economist Marius Gonsholt Hov writes in a comment that one must be careful not to put too much emphasis on individual figures in the unusual situation we are in now, but that there are several factors that indicate that the recovery after the fall in March and April has now lost some momentum.

– The Norwegian economy continues to grow, but now at a clearly slower pace. The recovery of stronger growth is probably behind us, writes the economist, who is also confident in the evolution of the labor market.

– However, we still hope that it will be a long time before we are completely back on our feet, he writes.

Handelsbanken maintains its view that it may take several years to return to full capacity utilization in the economy.

DNB Markets chief economist Kjersti Haugland notes in a comment that the recovery will lose momentum in July, but that the development is in line with Norges Bank’s June forecast.

Norges Bank’s next interest rate meeting is September 24, at which point the central bank will also update its forecasts.

There is a wide expectation that the bank will keep interest rates unchanged at a record low of zero percent at this meeting, while there is more tension associated with the evolution of long-term interest rates.

Here you will find the figures in Statistics Norway