June 12, 2018 / 8:16 AM / in 8 days

UPDATE 2-Norway central bank business survey sees higher growth, crown rallies

* Norwegian businesses report stronger growth outlook

* Rates likely to rise in September, economists say

* Central bank policy meeting due June 21

* Crown currency strengthens after report (Adds reaction, bullet points)

By Camilla Knudsen and Ole Petter Skonnord

OSLO, June 12 (Reuters) - Norwegian companies are expecting the pace of output growth to accelerate in the next half year, despite underperforming somewhat during the latest three-month period, a central bank business survey showed on Tuesday, strengthening the crown.

“Contacts as a whole report slightly weaker output growth than in January. Overall, contacts expect a pick-up in growth in the period ahead, and expectations have been revised up slightly since January,” the bank said in a survey of 322 companies.

Norges Bank’s regional network business survey, a key component in rate decisions and interest rate forecasts, follows Monday’s release by Statistics Norway of weaker-than-expected May inflation.

“This implies above-trend growth, lower unemployment and higher wage growth, which in turn will push inflation higher,” Danske Bank Chief Economist Frank Jullum said of the survey, which was primarily conducted in May.

The central bank, which in March signalled that it may hike rates in September, is due to hold its next rate decision on June 21.

“Norges Bank will signal a September rate hike. They must start the normalisation of rates before inflation picks up too much,” Jullum predicted.

The crown, Norway’s currency, strengthened against the euro to a seven-month high of 9.4325 from 9.4695 shortly before the 0800 GMT release.

DNB Markets said the survey’s outlook would lead the central bank to maintain its rate forecasts.

“The network survey underpins the outlook. Even if inflation was surprisingly weak, that may have been coincidental, so we maintain expectations of a September hike,” DNB economist Kyrre Aamdal said. (Writing by Terje Solsvik, editing by Gwladys Fouche)

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