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Fast Comment SwedenBusiness sector production in February is one more sign of a cooling economy

  1. Downward revision to January, growth stalls
  2. Still high level of production, sustaining bright labour market
  3. New macro forecast report tomorrow!
Downward revision to January, growth stalls
Business sector production growth data for February shows an ongoing cooling off of the Swedish economy. In fact, the Production Value Index (PVI) has stopped increasing, according to the trend in monthly growth. The plain monthly growth reading in February was in line with expectations (0.0 percent m-o-m, our estimate 0.1, consensus, only 4 analysts: 0.0). However, January was revised down, resulting in significantly lower annual growth than expected.
Still high level of production, sustaining bright labour market
While growth is slowing, it is worth remembering that the level of production remains high, after years of booming economy. Therefore, we think the impact on the labour market is still some way off. Employment keeps on rising, a strong indication that, for the time being, Sweden's overall economic climate remains good. On the other hand, new manufacturing orders are now weaker than average after a period of gradual dampening. That means manufacturing will further drag down the PVI ahead.
New macro forecast report tomorrow!
Tomorrow, April 9, we publish our Global Macro Forecast report. For Swedish growth we stick to our view of a muted 2019, despite the growth spurt toward the end of 2018. Today's PVI is well in line with that forecast.


Production Value Index February: Monthly growth trend at 0 percent 




Some recovery in Construction, but we think there is more weakness ahead 


Source: Macrobond



All new orders indicators point in the same direction: down 




Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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