(Adds crown, economists)
OSLO, March 7 Norwegian companies expect their
businesses to grow faster over the next six months, a central
bank survey showed on Tuesday, sending the crown currency higher
as economists said the chance of a rate cut is receding.
The Norwegian economy is slowly picking up after a two-year
slowdown in its top industry, oil production, due to a halving
of crude prices since mid-2014. In recent months, crude prices
have risen and stabilised at around $55 per barrel.
The regional network survey of 327 companies is the central
bank's primary sentiment gauge and usually forms the backbone of
its rate decisions and interest rate forecasts. The next rate
decision is due on March 16.
"Output growth is primarily being generated by higher public
demand. Growth has picked up in all sectors, except for the
export industry," the bank said in the survey, which also
reported that business activity had grown moderately over the
past three months.
The crown currency strengthened following the survey,
trading at 8.9348 per euro at 0913 GMT against 8.9788
"Now we are moving into a phase where there is no need to
cut interest rates, we are heading towards a tightening bias,"
said Frank Jullum, chief economist at Danske Bank.
"There is improvement in all sectors. It is a combination of
less headwinds in the oil industry, as a result of higher oil
prices. And there is strong growth in the rest of the industry."
The central bank's key policy rate is at 0.50 percent. It
has said it expects that rate to stay at that level "in the
Still, weaker-than-expected inflation in February suggested
the chance of a further rate cut was still there.
"This strengthens our belief that there won't be further
rate cuts, but it will still be a while before rates rise," said
Erik Bruce, chief analyst at Nordea Markets.
(Reporting by Gwladys Fouche, Nerijus Adomaitis and Ole Petter
Skonnord; editing by John Stonestreet)