This week, the markets are following three key figures in particular, says chief economist Kjersti Haugland at DNB Markets.
The first week of June is upon us, and according to chief economist Kjersti Haugland at DNB Markets, the coming week will be relatively calm – with the exception of three particularly important key figures.
– There are some clear highlights, says Haugland.
Housing prices in May
First up are figures on housing prices in May, which are presented by Eiendom Norge on Monday. In April, house prices rose by 1 per cent and, corrected for seasonal variations, the price increase was 0.7 per cent.
DNB Market’s forecasts are that the rise will continue and that there will be a house price rise of 0.4 per cent adjusted for seasonal factors in May.
Several experts are more or less in agreement that the figure will show house price growth for the fifth month in a row.
– This implies continued good development in the housing market, and this must be seen in the light of a good labor market and the fact that the situation is bad on the new housing front. People are reluctant to buy new homes that have been completed a little ahead of time, and are probably a little skeptical given that so much has happened in the past year. Thus, demand is directed towards second-hand homes, says Haugland.
DNB Markets further believes that the increase in house prices will taper off during the year, and that it will level off at the beginning of 2024.
– After all, the interest rate effect will weigh on demand, and the interest rate will continue to rise from the current level if our estimates are correct.
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Figures from the service sector
On Monday, there will also be important figures from the US.
Then the Institute for Supply Management (ISM) presents figures for activity in the US economy in the service sector.
The ISM index for the service sector is expected to rise to 52.1 points in May, from 51.9 the previous month, which would then be the fifth consecutive month of growth in the US service sector, writes Infront TDN Direkt.
Haugland says that activity in the service sector has remained strong for a long time in both the US and Europe, but that it has recently moderated.
– We believe that the ISM index for the service sector is slightly lower than in April, and that it will end at 51.5. This indicates that there is still a small majority of companies that are still experiencing an increase in activity, but a weaker development than what can normally be expected. It is a sign of the cooling of the economy.
According to Haugland, this is one of the things the market is most curious about.
– The question is whether the American economy is going to land hard or soft in light of rising interest rates and trouble in parts of the banking sector.
Higher interest rate peak
On Friday, the stage is set for what will be the week’s biggest event in the economic world here at home: Statistics Norway will then present Norwegian inflation figures from May.
Inflation measured by the consumer price index (CPI) moderated to 6.4 per cent in April this year from the same time last year. Core inflation stood at 6.3 per cent in April.
DNB Markets expects that price growth will remain at the same level in May.
– In that case, it is higher than what Norges Bank assumed when they made their last estimates, in which case it will be a factor that means that we will probably get a higher interest rate peak than what they envisioned when they presented their latest estimates in March, says Haugland.
Later in June, Norges Bank will present new forecasts for the interest rate path. Here, Haugland expects the central bank to present a higher interest rate path than before.
– The fact that inflation has been higher is obviously a factor, but more important is that price impulses are stronger going forward. How strong the fall in inflation will be will be characterized by a stronger wage settlement than expected and that we will have a clear effect on inflation. The decline in inflation this autumn is clearly being slowed down by the fact that the krone exchange rate has weakened.
It is therefore the devaluation of the krone and the wage settlement that can lead to a higher interest rate peak, Haugland believes and adds:
– And the fact that inflation is higher than expected contributes in the same direction.
CPI down to 5.6 percent
Nordea Markets predicts a decline in the CPI to 5.6 per cent annually in May from 6.4 in April, driven by lower energy prices.
“There is considerable uncertainty about the impact of electricity prices on inflation, but we will be extremely surprised if headline inflation has not come down in May,” the brokerage house writes.
On the other hand, the brokerage house expects core inflation to rise to 6.5 per cent on an annual basis in May from 6.3 in April.
“The increase in core inflation has been quite broad and we do not believe that the May inflation will be any exception.”
2023-06-04 17:46:35
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