Market Views, Macro | Stable Employment Growth
While unemployment has risen, the number of advertised vacancies remains high. Further interest rate cuts are likely to support the economy, and employment growth is expected to remain stable going forward.
Summary
- Although unemployment has risen recently, the number of advertised vacancies remains high, indicating continued robust employment growth.
- In Oslo, ICT has contributed to weaker employment growth, while finance and insurance as well as public administration and defence have provided positive contributions. We expect public administration and defence to continue supporting employment growth in Oslo going forward.
- Further interest rate reductions are likely to underpin economic activity and help maintain stable employment growth in the period ahead.
Stable employment growth
NAV’s measure of registered unemployment indicates that joblessness in Norway remains low, below its historical average. However, Statistics Norway (SSB) reports that its survey-based measure of unemployment has increased somewhat in recent months. The rise has been most pronounced among young people newly entering the labour force, while unemployment remains lower across the broader population, according to SSB.
Overall, the unemployment data suggest that there is somewhat more slack in the Norwegian labour market. At the same time, the high number of job postings implies that employment will hold up. This view is reinforced by Norges Bank’s Regional Network Survey, where firms report robust employment growth and expect stable hiring momentum through the autumn.
Employment growth in Norway has slowed markedly from its peak in 2022, which reflected a strong post-pandemic rebound. Since then, employment growth has converged towards more normal rates for the Norwegian economy.
In Oslo, overall employment growth has also moderated since 2022. Within office-based occupations, ICT has weighed on employment growth over the past year, which is not surprising following exceptionally strong growth during and immediately after the pandemic. By contrast, employment in finance and insurance as well as in public administration and defence has strengthened in recent quarters. Given the substantial increase in planned spending on infrastructure and defence in the years ahead, we expect public administration and defence to continue supporting employment growth in Oslo going forward.
Although unemployment has edged up somewhat at the national level, employment growth in the Norwegian economy remains solid. Looking ahead, further interest rate reductions are expected to underpin economic activity and job creation, both nationwide and in Oslo.
Norges Bank has signalled one, possibly two, rate cuts this year. Market expectations are broadly aligned. If anything, market pricing points to a slightly faster pace of monetary easing over the coming year than Norges Bank has indicated.
Looking ahead, Norges Bank forecasts that growth in mainland GDP and overall employment will remain relatively stable, at rates closer to the long-term norm for the Norwegian economy.
Stable employment growth would also point to a steady development in the office property market, which we discuss in the next part of this analysis.