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Fast Comment SwedenLabour market keeps on improving, a turn for the worse is still some way off

  1. February unemployment in line with expectations
  2. We see further downside to the jobless rate, despite spike in layoffs statistics
  3. Later this year, however, the cooling economy will take its toll on jobs
February unemployment in line with expectations
The Labour Force Survey shows that the downward trend in unemployment is intact. The actual outcome was more or less unchanged at 6.6 percent, while the seasonally adjusted reading turn out at 6.2 percent. Both were one notch above our expectations, and roughly in line with consensus. Note that such small deviations are unusual with these erratic data.
We see further downside to the jobless rate, despite a spike in layoffs statistics
Leading indicators generally suggest that the labour market situation will improve further, albeit at a slower pace. Employment growth is already past its peak, but still healthy. The notice of layoffs data have sent cold chills, but the alarmingly high February reading does not mirror underlying developments in the economy. Instead, the Public Employment Service has had its funding from the government lowered and is therefore about to close a substantial share of its offices, resulting in a lowering of headcount.
Later this year, however, the cooling economy will take its toll on jobs
We forecast the economic boom to cool this year and next, which will dampen the demand for labour and eventually push up unemployment. We expect the jobless rate to reach a trough around the middle of this year.


Labour market situation still strengthening, with rising labour force and employment 


Source: Macrobond



Leading indicators have generally begun to cool, but some still signal further increase in employment




We judge the spike in notice of layoffs to be temporary, following substantial downsizing at the Public Employment Service 




We expect an unemployment trough later this year




Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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