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UPDATE 1-Norway firms tell central bank that growth is picking up
June 13, 2017 / 10:07 AM / in 6 months

UPDATE 1-Norway firms tell central bank that growth is picking up

* Business survey says growth was stronger than expected

* Business outlook also improving

* Central bank rate meeting due on June 22 (Adds quotes, background)

OSLO, June 13 (Reuters) - Norwegian companies expect their output to pick up further over the next six months, a central bank survey showed on Tuesday, a pointer to stronger economic growth that could lead the bank to tone down or abandon its easing bias on interest rates.

The regular survey of businesses measures company output growth by volume, and includes all kinds of firms ranging from manufacturing via retailers to service industries.

Norway’s economy is heavily dependent on investments in the oil and gas industries and was hard hit by a 60 percent plunge in the price of crude since 2014, although growth has gradually recovered from a seven-year low seen in 2016.

The Norwegian central bank’s survey of 329 companies showed respondents had seen stronger-than-expected growth since February and expect a further increase ahead.

“Output growth has been strengthened by growth in public investment, a less pronounced decline in the oil industry and increased private sector demand,” Norges Bank said.

“Contacts expect the pace of growth to rise further over the next six months,” it said of the survey, which informs its rate decisions and interest rate forecasts.

The next rate decision is due on June 22, and while economists do not expect a change from the current record low 0.5 percent, it could change the future outlook.

“This pulls up the rate path and may mean that we no longer get signals of an easing bias,” Danske Bank Chief Economist Frank Jullum said.

DNB Markets Chief Economist Kjersti Haugland said the survey was stronger than expected.

“This is another indicator confirming the Norwegian economy is picking up, and boosts the likelihood that the central bank will say capacity utilisation has risen more than anticipated,” she added.

Norway’s crown currency rose on the news to trade at 9.4475 against the euro at 0913 GMT from 9.4662 just ahead of the 0800 GMT release. (Reporting by Camilla Knudsen and Ole Petter Skonnord, Writing by Terje Solsvik; Editing by Catherine Evans)

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