NORWAY: Industrial Confidence Indicator Negative Despite "Cautious Optimism"
The Norwegian industrial confidence indicator (which provides signal of output expectations in the forthcoming quarter) slipped to -0.3 in Q3, down from 0.4 in Q2. The indicator remains below the historical average of 2.8. The decline in the composite indicator was driven by capital and intermediate goods producers, offset a little by an increase in output expectations for consumer goods producers.
- The survey suggests that manufacturing industrial production momentum is unlikely to rebound materially in the fourth quarter, having declined in July and August.
- The survey won’t be a game-changer for Norges Bank, but adds to the stock of activity data ahead of the December meeting, where an updated set of forecasts and rate path will be presented. Norges Bank meet on November 6 too, but guidance changes are rare at interim (i.e. non MPR) meetings.
- Despite the negative confidence indicator, the general message from the survey was one of “cautious optimism”. From the survey: “Manufacturing leaders expects moderately higher production volume and no change in average employment in the 4th quarter, compared to the 3rd quarter this year. A moderate increase in new orders is also expected from both the domestic and export markets. The total stocks of orders are expected to increase slightly in the 4th quarter”.
- The average capacity utilisation for the manufacturing industry fell to 77.4% in Q3 (vs 78.1% in Q2), then lowest since Q3 2020. The survey notes that “The proportion of industry leaders reporting that weak demand and strong competition limit production is still relatively high and has been fairly stable for the past two years. In the last quarters, there have been fewer industrial leaders pointing out that the lack of qualified labor is a factor that limits production”
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NORWAY: Statistics Norway Only Expects One More Norges Bank Cut This Year
Statistics Norway has revised up its Norges Bank terminal rate forecast to 3.50%, from 3.25% in the June projection round. Stats Norway’s head of research notes that “A marked upturn in the Norwegian economy and surprisingly high wage growth mean that we only expect one further interest rate cut this year and two more next year. This will bring the key rate down to 3.5 per cent towards the end of 2026”
- The Norges Bank decision, which includes an updated MPR and set of forecasts, is due on Thursday. It’s set to be a close call, but we currently lean against consensus in favour of a hold at 4.25%. Full preview here
- Statistics Norway writes that “Household purchasing power has increased and income growth will continue for the next years. In addition, the state has gained greater purchasing power because of the enormous increase in the petroleum fund, which provides scope for a continued expansionary fiscal policy in the near term”
- Additionally, it highlights that wage growth has been “surprisingly high” in 2025. The 2025 full-year wage growth projection has thus been revised up to 4.9% (well above Norges Bank’s 4.5% forecast).
- Stats Norway plays down the recent rise in the LFS unemployment rate, emphasising that this has been driven by labour force increases.
AUDUSD TECHS: Bulls Remain In The Driver’s Seat
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6700 Round number resistance
- RES 1: 0.6688 High Nov 7 ‘24
- PRICE: 0.6666 @ 07:57 BST Sep 16
- SUP 1: 0.6568/6531 20- and 50-day EMA values
- SUP 2: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 3: 0.6373 Low Jun 23
- SUP 4: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg
AUDUSD bulls remain in the driver’s seat. The latest rally plus the breach of 0.6625, the Jul 24 high and bull trigger, confirm a resumption of the uptrend. The climb opens the 0.6700 handle next. Moving average studies are in a bull-mode position highlighting a dominant uptrend. Key support to watch is 0.6415, the Aug 21 / 22 low. Initial firm support to monitor lies at 0.6531, the 50-day EMA.
GILTS: Opening Calls
Gilt calls, 91.45/91.46.
