Norway: February retail sales – be prepared for a surprise

30 March at 10:00 CET Statistics Norway will publish retail sales figures (seasonally adjusted) for both January and February. The seasonally adjusted January figures were not published last time because Statistics Norway was changing the way it made the seasonal adjustment. This means the uncertainty is extraordinarily high this time and that one should be prepared for potentially large deviations from the consensus forecast of -0.5% m/m in February. There is no consensus forecast available for January retail sales.

We expect a sharp downward correction…

Nordea’s forecast for February retail sales is clearly on the weak side to the consensus forecast with -1.4% m/m. But this is given that our strong forecast for January is right with +1.8% m/m. We have based our January forecast on the seasonally adjusted figures for two subgroups of the consumption of goods indicator (which were published last time), namely “consumption of food and beverages and tobacco” and “consumption of other goods”. These two subgroups correspond to a large degree to what is included in the retail sales figures and both these groups increased by 1.7% m/m in January (seasonally adjusted). Hence, we expect a correction down after the very strong January retail sales. The monthly figures for card transactions also suggest weak retail sales in February.

…but the strong trend in retail sales remains

If we are right in our forecast, the average of January and February is still 1% higher than the average in Q4 2011. It means that the strong start of 2012 in retail sales continues despite the expected correction down in February. If the consensus forecast of -0.5% m/m is right, the trend in retail sales is very strong and probably much stronger than Norges Bank’s forecast, of course given that the January figures were as strong as we believe they were.

Important figures for Norges Bank

In Norges Bank’s latest Monetary Policy Report from 14 March the forecast for growth in private consumption was adjusted down substantially. This was an important factor behind the decision to cut rates at the March MPC meeting. The forecast is now 3% growth in 2012, adjusted down from previous forecast of 4 ½%. This reflects a radical change in Norges Bank’s view on the consumers – from believing in a drop in the household savings rate in 2012, it now forecasts an increase. Households’ real disposable income will increase strongly in 2012 (close to 5%) and given that the savings rate is already at high level, the potential for a much stronger consumption growth is very much in place. There is a clear upside risk to Norges Bank’s forecast for private consumption.

Tomorrow’s retail sales figures will show how strong Norwegian consumers started 2012. If we are right in our forecasts for January and February retail sales, the trend in retail sales is more or less in line with both our and Norges Bank’s view. But if the consensus forecast is right, the trend is much stronger and on the upside to Norges Bank’s forecast.
Read all of Katrine Godding Boye's research



Latest research

IDR: IDR: Jokowi win paves way for strengthening

The official election result is out and Indonesia has got a new president, the popular Jokowi. This is already priced in the market so IDR will be range-bound for now. It would be IDR positive in a longer perspective, if he succeeds in promoting growth and improving standards of living.

Euro area: PMIs offer hope amidst gloomy headlines

The flash PMIs for July point to a continued recovery in the Euro-area economy. Positive development in sentiment indicators is certainly welcome at a time, when the effect of e.g. the Ukrainian/Russian crisis is weighing on the economy. It is worth remembering that the numbers are unlikely to capture the recent escalation in geopolitical tensions, but the latest weakening of the euro and the ECB’s June easing package, on the other hand, are supportive of the Euro-area economy.

Sweden: Same old story in unemployment

Unemployment bounced back somewhat in June after the stronger than expected reading in May. Seen over the last two years, it is very hard to spot any clear trend downward in unemployment, despite the clear trend upward in employment. Today’s number did not change this overall picture and the expected, future decrease in unemployment seems to continue to be very gradual.

Swedish Morning Briefing - Thursday July 24

South Korea presents stimulus package Reserve Bank of New Zealand lifts policy rate

China: Good PMI no guarantee for growth outperformance

The Chinese economy is currently in a cyclical upturn. But the long-term perspective has not changed. The economy will continue to readjust to the new normal, meaning that a significant pick-up of growth is unlikely.

FI Eye-Opener: Reaching for the stars

German bonds take back earlier losses – yields to creep higher today. S&P 500 just manages to rise to new highs. China’s economy picks up steam. Bank of England not unanimous for too much longer? Russian sanctions on the agenda again. Euro-zone PMIs set to rebound.

Euro Rates Update

The latest Euro Rates Update is now available

BoE minutes: First hike getting closer, but not around the corner yet

BoE minutes showed a unanimous monetary policy decision at the July meeting, but the differing views about the outlook are starting to emerge. The modest wage pressures mean that the Bank is not in any hurry to start to raise rates, and the first rate hike is not around the corner. The August monetary policy meeting and the inflation report will be interesting.

Swedish Morning Briefing - Wednesday 23 July

EU to limit Russian access to capital markets Minutes of BoE meeting due at 10.30

FI Eye-Opener: Some easing in Euro-zone deflation threat

German yields rebound – US Treasuries end with a small rally. Core bond to remain supported today. Equities with clear gains. EU continues to advance with small steps with Russian sanctions. US inflation pressures remain limited for now. At least some easing in the Euro-zone deflation threat. New 30-year benchmark from the EFSF. BoE minutes and French business confidence ahead.

US: Core consumer prices rise less than expected

The overall trend of inflation remained subdued in June

Morning Briefing - Tuesday July 22

Japanese government cuts GDP forecast Pro-Russian separatists hand over black boxes to Malaysia

FI Eye-Opener: Searching for inflation

Core bond yields edge further down – geopolitical tensions continue to support bonds. Equity markets feeling pressure. More sanctions on Russia in the pipeline. US inflation pressures finally picking up? Belgium to sell longer bonds.

Morning Briefing - Monday July 21

Growing pressure for further sanctions against Russia Israel steps up ground offensive in Gaza

While you were busy...

If you are just back from holiday, here are a few bullets on what happened while you were busy…

FI Eye-Opener: Markets too upbeat on Europe?

Bond yields end a bit higher, but near-term upside still limited. US equities with a clear rebound – resistance in sight. Money market rates rise on higher LTRO repayments. More warnings on markets being too optimistic. US inflation numbers and Euro-zone PMIs ahead. Supply action easing – more coupon and redemption payments ahead.

FX: the EUR trap

Is Europe next Japan? Hopefully not. ECB and releveraging implications for EUR.

Week Ahead: 19 - 25 July 2014

US CPI inflation will be out on Tuesday . China and the Euro-zone will present PMI figures. On Friday the German Ifo indexes is released. The BoE will deliver minutes from the July meeting and UK GDP figures will be out on Friday

Swedish Morning Briefing - Friday 18 July

Passenger plane downed over eastern Ukraine Israel launches ground offensive in Gaza

FI Eye-Opener: Increasing tensions to push German yields to new lows

Bonds continue to rally – yields in several semi-core countries hit record lows. Equities suffer a beating. Chinese home prices continue to fall. Geopolitical concerns take centre stage ahead of the weekend. German 10-year yield about to fall to new lows. Mixed US data – Bullard sees early rate hikes. No ABS purchases from the ECB for a long while. US consumer confidence and euro debate ahead.