Weekly Bulletin 14 October 2024
Tomorrow morning, Landsbankinn Economic Research presents a new economic forecast to the year 2027 at a morning meeting in Harpa. This week, the Housing and Construction Authority (HMS) publishes the housing price index, the rental price index and its monthly housing market report. On Wednesday, the Central Bank of Iceland (CBI) releases the minutes of the Monetary Policy Committee’s last meeting. Last week’s highlight was that traveller numbers to Iceland are slightly up between years in September and there is a small uptick in unemployment.
14 October 2024
The week ahead
- Tomorrow morning, we will present our new forecast leading up to the year 2027 at a morning meeting in Harpa. Later the same day, HMS releases the housing price index.
- On Wednesday, the Central Bank of Iceland (CBI) releases the minutes of the Monetary Policy Committee’s last meeting and payment mediation figures for September. HMS publishes the rental price index and we’ll see inflation figures for the UK.
- On Thursday, Hagar publish results.
Image of the week
The ratio of foreign labourers in the domestic labour market has risen from around 7% at the beginning of 2005 to 32% in August of this year. Foreign labourers move to the country during upswings and the group diminishes quickly in downturns. This has the impact that unemployment does not increase as much as it otherwise would during economic slumps, nor does it decrease much in boom periods. Fluctuations in unemployment are as a result less pronounced. The influx of foreign labour in the market has now slowed down, in keeping with the cooling currently taking place in the economy.
Highlights of the previous week
- Price measurements for the October Consumer Price Index were carried out last week. We expect the CPI to rise by 0.27% between months and annualised inflation to decrease from 5.4% to 5.1%. We expect annualised inflation to continue on a downward trajectory in the coming months and to recede to 4.2% by January 2025.
- Around 223,000 non-domestic travellers passed through Leifsstöð International Airport in September, a 2% increase from September 2023. A total of 1,744,000 travellers visited Iceland in the first nine months of the year, representing an increase of just over 1% from the same period the previous year. In the month of September, tourist departures have only once exceeded this year’s total and that was in 2018, when September departures were 4% higher. Departures in the first nine months of the year were 5% fewer now than in the record year 2018.
- Registered unemployment was 3.3% in September, up from 3.2% in August. Unemployment is generally lowest during the summer months and increases moving into winter. This month-over-month increase represents normal seasonal changes. Unemployment was 0.3 percentage points higher in September of this year than in 2023, continuing the trend of the last few months and indicating that there is growing slack in the labour market.
- Inflation in the US receded from 2.5% to 2.4% in September. While annualised inflation has receded between months, the measurement was slightly higher than expected, increasing the likelihood that more measured steps will be taken in the rate-cutting process at the next decision date on 6 November. The annualised change to the core index, i.e. excl. food and energy, rose from 3.2% to 3.3%.
- Ölgerðin (investor presentation) published results. Icelandair and Play released September load figures.
- Landsbankinn concluded a covered bond auction and offered switches. RARIK, Hagar and Lánasjóður sveitarfélaga auctioned bonds. Government Debt Management published Markaðsupplýsingar and announced the results of a tap.
Statistics and market data
Weekly bulletin 14 October 2024 (PDF in Icelandic)
Disclaimer
This review and/or summary is marketing material intended for information purposes and not for business purposes. This marketing material does not contain investment advice or independent investment analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication.Information about the prices of domestic shares, bonds and/or indices is source from Nasdaq Iceland - the Stock Exchange. Landsbankinn’s website contains further information under each individual equity, bond class or index. Information about the prices of non-domestic financial instruments, indices and/or funds are sourced from parties Landsbankinn considers reliable. Past returns are not an indication of future returns.
Information about the past returns of Landsbréf funds is based on information from Landsbréf. Detailed information about the historic performance of individual funds is available on Landsbankinn’s website, including on returns for the past 5 years. Information about the past performance of funds show nominal returns, unless otherwise stated. If results are based on foreign currencies, returns may increase or decrease as a result of currency fluctuations. Past returns are not necessarily an indication of future returns.
Securities transactions involve risk and readers are encouraged to familiarise themselves with the Risk Description for Trading in Financial Instruments and Landsbankinn’s Conflict of Interest Policy, available on Landsbankinn’s website.
Landsbankinn is licensed to operate as a commercial bank in accordance with Act No. 161/2002, on Financial Undertakings, and is subject to supervision by the Financial Supervisory Authority of the Central Bank of Iceland (https://www.cb.is/financial-supervision/)
You may also be interested in
15 Oct. 2024
Landsbankinn Economic Research forecasts a status quo in the economy between years and a 0.1% contraction in GDP. Setbacks affected the export sector in the first half of the year, with capelin catch failure and slower growth in the travel sector causing a contraction. This has been compounded by the cooling impact of high interest rates on demand, which nevertheless remains strong.
7 Oct. 2024
The Monetary Policy Committee (MPC) of the Central Bank of Iceland (CBI) lowered the policy rate last week, for the first time in four years. The CBI’s key interest rate is now 9% after having stood unchanged at 9.25% for over a year. Inflation in the eurozone remains on a downward trajectory, measuring 1.8% in September, below the 2% inflation target. Inflation figures for the US will be published this week.
30 Sept. 2024
Inflation was slightly lower than expected in September, down from 6.0% to 5.4%. We nevertheless expect that the Monetary Policy Committee (MPC) will wish to proceed with caution when it meets early this week and that it will keep the policy rate unchanged on Wednesday.
23 Sept. 2024
This week, the Central Bank of Iceland (CBI) releases a statement from the Financial Stability Committee and a report on financial stability. Statistics Iceland publishes inflation figures for September on Friday. Last week, the Housing and Construction Authority (HMS) published the housing price index, which rose sharply between months, and the rental price index, which was down between months. Data on payment card turnover, published by the CBI last week, indicates that there is still considerable domestic demand for goods and services.
16 Sept. 2024
This week will see the publication of the housing price index, the rental price index and payment card turnover figures for August. Last week we learned that tourist arrivals in August of this year were similar to the same month in 2023. Unemployment increased slightly between months in August. The fiscal budget for 2025 was presented.
9 Sept. 2024
This week’s highlights are the publication of August tourist figures and registered unemployment, both set for release tomorrow. Last week, the minutes of the last rate decision meeting of the Monetary Policy Committee (MPC) were published. The MPC was unanimous in its decision to keep the policy rate unchanged, unlike the previous three meetings, at which one Committee member voted to lower rates by 0.25 percentage points.
2 Sept. 2024
Inflation decreased unexpectedly between months in August. The economy contracted slightly between months in the second quarter. At the same time, it has become clear that GDP growth was higher in 2023 than previously thought, and that the contraction was less pronounced in the first quarter. This week, the Central Bank of Iceland (CBI) publishes the balance of payment and the minutes of the last meeting of the Monetary Policy Committee (MPC).
26 August 2024
Non-domestic payment card turnover in Iceland is higher this year to date than previously thought, according to updated figures published by the Central Bank of Iceland (CBI) last week. This week’s highpoint is the CBI’s interest rate decision on Wednesday.
19 August 2024
Non-domestic payment card turnover in Iceland is higher this year to date than previously thought, according to updated figures published by the Central Bank of Iceland (CBI) last week. This week’s highpoint is the CBI’s interest rate decision on Wednesday.
12 August 2024
Departure by non-domestic travellers from Leifsstöð International Airport in July were very similar to the previous year while departures by domestic tourists are somewhat fewer. August measurements for the consumer price index take place this week and several listed companies publish results.