OSLO - The Norwegian mainland economy grew at a faster-than-expected pace in the July-September quarter, accelerating from the early parts of 2021 as COVID-19 lockdowns were lifted, Statistics Norway (SSB) data showed on Friday.

Third-quarter mainland GDP, a measure which excludes oil and gas production, rose 2.6% compared with the April-June period, SSB said, while a Reuters poll of analysts had predicted an increase of 2.5%.

Norway began lifting its coronavirus lockdown measures in the second quarter and removed the final domestic restrictions by the end of September, setting the stage for a sharp economic recovery.

"The growth in the third quarter is mainly due to service industries which have been hit hard during the pandemic," SSB economist Paal Sletten said in a statement.

Activity rose strongly in accommodation and food services as well as the arts, entertainment and other activities, the agency said, adding transport services performed robustly too.

"Meanwhile, there was also a huge increase in employment. Adjusted for seasonal variation, employment increased by 2.2% in the third quarter," SSB added.

The crown currency strengthened against the euro to trade at 9.98 at 0728 GMT, from 9.99 just before the data release.

The Norwegian central bank in September raised interest rates for the first time in two years and plans a series of rate hikes in the coming years.  

The second-quarter mainland GDP reading was revised to 1.1% from 1.4% originally.

In 2020, the Norwegian economy contracted by 2.3%, making it the weakest year since World War Two.  

(Editing by Gwladys Fouche and Mark Potter ) ((terje.solsvik@thomsonreuters.com; +47 918 666 70))