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Norway Unemployment Unexpectedly Drops in May as Jobs Added

July 31 (Bloomberg) -- Norway’s unemployment rate unexpectedly dropped in May, damping speculation the central bank will cut interest rates in September.

Unemployment, adjusted for seasonal variations, fell to 3.4 percent in May from 3.5 percent in April, Oslo-based Statistics Norway said on its website today. Unemployment was seen at 3.5 percent, according to the median estimate of four economists surveyed by Bloomberg.

Norway’s central bank in June signaled an increased chance for an interest rate cut this year as inflation is slower than projected amid weakening economic growth in western Europe’s largest oil producer.

“Stabilization in the unemployment rate should be comforting and add to other data suggesting Norges Bank should stay on hold at 1.5 percent at its September meeting,” Erica Blomgren, a strategist at SEB AB, said in a note.

Norway’s $740 billion sovereign wealth fund, the world’s biggest, has shielded the nation from the fallout of the euro area’s shrinking economy. While survey unemployment in Norway is up from 2012 levels, it remains below the record 12.2 percent rate in the 17-nation euro area.

Norges bank estimates unemployment will average 3.75 percent this year and the next.

To contact the reporter on this story: Saleha Mohsin in Oslo at smohsin2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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