Fast Comment Denmark - Macro Research - Handelsbanken Capital Markets


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Fast Comment DenmarkSpring mood in the industrial sector

  1. No sign of Italian crisis in industry (yet)
  2. Service sector disappoints slightly but construction picking up
  3. Barometers send overall positive signs of continued moderate growth
Positive surprise from industry
It is doubtful that the Danish business barometers will achieve much attention in light of the marked focus on the current Italian woes. However, we do not think it should go unnoticed that the Danish industrial sector seems to be enjoying the current hot weather, sending the business barometer up against all odds from -1 to 4 in May - the second highest since 2014. Thus the weaker signals from the euro area and also the weak SEK seem to have had no apparent impact. It is however too early to expect any significant impact from the fooleries of the Italian politicians, and we will have to wait until next month to see if there is any real impact. But the upshot is that industry seems to be in good health at the moment.
Service sector dragging
The service sector could not quite live up to the good news from industry, with an unchanged barometer of 9 in May. We had expected an increase based on the improvement in consumer confidence, but for now the signal is one of only moderate growth in the heavy service sector. The construction sector however got a whiff of the spring air, with an increase from -4 to -1.
So far so good
In combination, the barometers indicate that the slowdown in the economy in Q1 was hopefully only temporary. While the economy does not appear to be riding at full throttle, we maintain our expectation that growth will continue at a moderate pace, even though we still believe that the peak in annual growth is behind us. Uncertainty has risen as of late, especially if the Italian disease spreads to become a more fundamental economic crisis in the euro area - for instance via the banking system. This could potentially have repercussions for the Danish economy.


Jes Asmussen

Chief Economist Denmark

Denmark and The Netherlands

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