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Fast Comment SwedenSeptember sentiment indicators

  1. Strong sentiment underscores that economic boom will go on
  2. Construction sector staying surprisingly positive - will that add to our forecast for 2019 GDP growth?
  3. Retail sector staying the course on autumn prices hikes, despite tough summer
Strong sentiment underscores that economic boom will go on
The business and consumer surveys of the National Institute of Economic Research show that economic sentiment in Sweden remained buoyant in September, much in line with analysts' expectations. The headline index, the Economic Tendency Indicator, was roughly stable at 111.7 (our estimate 110; Bloomberg survey median 110.3). This is underpinned by a more or less expected recoil in the Manufacturing Confidence Indicator, which fell from record highs to still a highly elevated 117.5 (119; 119.5). New orders seem to have turned a corner and continued up, and this positive manufacturing tendency was also mirrored in yesterday's healthy reading for August goods exports. Lastly, the Consumer Confidence Indicator stayed close to last month's upbeat note, at 103.6 (103; 102.25), following recent housing price stabilisation and a pickup in the stock market. After perplexing downward revision of GDP earlier this month, today's sentiment data shows that the economic boom will not end any time soon.
Construction sector staying surprisingly positive - will that add to our forecast for 2019 GDP growth?
Considering that building permits and construction starts have decreased, the construction sector indicators are surprisingly strong, significantly better than average. Next month, the next observation of firms' year-ahead expectations will be released. That will be important in assessing how large of an impact waning housing construction will have on GDP. Can the sector compensate better than we have assumed, by shifting spare capacity to other kinds of construction?
Retail sector staying the course on autumn prices hikes, despite tough summer
Pricing plans in the retail sector remained high in September. After the slump in retail sales during the unusually hot summer, one could have feared that the retail sector is suffering badly. Instead, it seems now that the effect was temporary. We await tomorrow's release of August sales.

Consumer confidence slump behind us, as housing prices show signs of stabilising and stock markets are on the rise 


Source: Macrobond


Firms' downbeat year-ahead expectations have so far not been followed by equally low activity in the construction sector 



Retail sector continues to see substantial price increases, despite many firms having had a difficult summer due to weather - most importantly, monthly NIER survey inflation indicators are stronger than normal





Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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