OSLO: Norway’s adjusted unemployment rate rose to the highest level since 2022 last month, exceeding the central bank’s estimate and raising the odds of an interest rate cut before next year.

The seasonally-adjusted registered jobless rate for July increased to 2.1%, the highest level since January 2022, data from the Norwegian Labour and Welfare Administration showed last Friday. Norges Bank had projected that unemployment would remain at 2% until September.

The data suggested the effects of monetary tightening by the central bank are feeding through to the Norwegian labour market, which has held up better than expected by policymakers even as the energy-rich economy has been nearly stagnant since last year.

A weakening labour market, along with slowing inflation, could prompt the central bank to reconsider its plans to keep borrowing costs steady until the start of next year, although the recent slide of the Norwegian krone suggested any easing remains distant.

“Today’s slight upside surprise should provide some assurance to Norges Bank that the economy is beginning to show signs of deceleration, making a December rate cut a likely scenario and an early Christmas gift for the Norwegian people,” Marthe Enger Eide, macro strategist at SEB AB, said in a note to clients.

 - Bloomberg