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Fast Comment SwedenBusiness sector production surges, putting it back in line with with GDP prints

  1. The April production value index data erases the tension compared to Q1 GDP and other indicators
  2. Leading indicators continue to suggest muted growth ahead, however
  3. Overall, we stick to the view of a gradual cooling-off, meaning the Riksbank's GDP forecast for 2020 appears optimistic

Please see comments and graphs below:

April PVI meant a large upward revision 

First and foremost, construction production has been revised up extremely. Remember that Q1 construction data released in May was better than expected. Manufacturing also picked up again in the April PVI.

In fact, the revised PVI series completely changed the impression of recent developments. Now the PVI even appears on the strong side of what leading indicators have been suggesting. It used to be the opposite. Still, growth deceleration is on the cards later this year.

Today's new orders data from Statistics Sweden joins yesterday's PMI in giving some hope for the manufacturing industry. However the global backdrop remains worrisome, of course. 

Previous tension between weak PVI and strong Q1 national accounts has now been erased, or even flipped around. We forecast a gradual cooling-off of the Swedish economy.


Johan Löf

Senior Economist


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