Weekly bulletin 9 September 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.
9 September 2024
The week ahead
- Tomorrow, the Icelandic Tourist Board releases departures from Leifsstöð International Airport in August and the Directorate of Labour publishes registered unemployment for the same month.
- On Wednesday, inflation figures will be published for the US.
- The European Central Bank (ECB) announces its interest rate decision on Thursday.
- Measurements for the September Consumer Price Index take place this week, with Statistics Iceland publishing the CPI on Tuesday, 27 January.
Image of the week
A total of 270 persons received their notice in major collective redundancies in August, in accordance with information from the Directorate of Labour. The redundancies are in the travel sector, computer manufacturing, manufacturing of equipment for food producers, and in construction. Since 2021, major collective redundancies have only once been higher, when 441 persons received their notice in May this year. The collective redundancies in May and August may indicate a cooling off in the economy and as most of the redundancies become effective later this fall, they may fuel unemployment going forward.
Highlights of the previous week
- According to the minutes of the MPC’s meeting, the decision to maintain unchanged rates in August was unanimous. At the previous three meeting, the then Deputy Governor for Financial Stability voted to lower rates by 0,25 percentage points. In our opinion, the tone of the MPC’s statement has become stricter, reducing the likelihood of interest rate cuts this year. The MPC discussed that “it could prove necessary to maintain a tight monetary stance for longer than would otherwise be necessary”, that the MPC considered it “difficult to curb demand in view of persistent wage rises and increased transfers from the Government”, and that “it could be difficult to bring inflation back to target within an acceptable time frame without a substantial slowdown in the economy”.
- In the second quarter, the current account deficit was ISK 34 billion. These results are much worse than for the same period last year, when there was a slight surplus. The main difference is a contraction in the surplus on the services balance as a result of a slacker quarter for the travel sector, and an increase in the trade balance deficit. The surplus on factor income decreased and the deficit on current transfers grew by ISK 2 billion.
- Reykjavík, Kópavogur and Garðabær published six-month results.
- Arion Bank sold ISK-denomicated bonds, Íslandsbanki offered covered bonds, Landsbankinn sold NOK and SEK-denominated bonds, Fossar Investment Bank auctioned bills, Alma íbúðarfélag auctioned bills and Government Debt Management auctioned Treasury notes.
- Icelandair released August load figures.
Statistics and market data
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
3 Dec. 2024
Monthly newsletter where Economic Research analysis new statistics, reviews current economic affairs and provides an outlook.
6 Nov. 2024
Monthly newsletter where Economic Research analysis new statistics, reviews current economic affairs and provides an outlook.
21 Oct. 2024
Last week, we published an economic forecast to the year 2027. The housing price and rental price indexes decreased more between months in September and household payment card turnover contracted between years domestically while rising abroad. The Central Bank of Iceland (CBI) published the minutes of the Monetary Policy Committee (MPC) meeting, which shows that all Committee members agreed to lower the policy rate. Several companies publish financial results this week.
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.
14 Oct. 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.
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.
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).