OSLO: Norwegian companies expect output growth to accelerate in the next half year, a central bank business survey showed on Tuesday, which may in turn lead the bank to raise interest rates earlier than expected.
Norges Bank's regional network survey is its primary gauge of sentiment and usually forms the backbone of rate decisions and interest rate forecasts. The next rate decision is due on March 15.
"Contacts report solid growth in public sector demand and improved export markets. A number of enterprises also refer to higher demand from the oil sector," the bank said in a survey of 338 companies. "Contacts as a whole expect somewhat stronger output growth over the next six months."
The survey indicated the economy would grow faster than expected and may put pressure on the central bank to begin raising rates earlier than its current forecast for a December policy tightening, analysts said.
"Our forecast is still for a December increase in rates, but this report raises the risk of an earlier hike," DNB Markets economist Jeanette Stroem Fjaere said.
The share of enterprises reporting capacity constraints has increased, but the share of contacts reporting labour shortages still remains small, the central bank said.
"Contacts report a moderate increase in employment, and they expect employment growth to remain moderate over the next three months," it said.
The survey showed companies overall estimate annual wage growth of 2.7 percent for 2018.
"This report points to accelerating growth, which is an argument for a steeper rate curve," Nordea Markets economist Erik Bruce said.
The crown, Norway's currency, initially strengthened against the euro, to 9.6234 from 9.6540 shortly before the 0900 GMT release. It later gave up some of the gains to trade at 9.6370.
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