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Fast Comment SwedenHousehold spending so far resisting the drag from global worries; July retail sales above our estimate

  1. Retail sales in line with consensus, but better than our estimate
  2. Retail sector confidence: Talk is cheap? Or, will sales actually start to deteriorate this autumn?
  3. Our GDP forecast for 2020 is below consensus, but hinges on household consumption staying robust


July retail sales (+0.4 percent m-o-m) in line with consensus (+0.3), but stronger than our estimate (-0.3). Overall the trend is currently positive, and the national accounts suggest tourist and cross boarder shopping are also contributing to this. 


Food sales eased as we had expected after a strong showing in June, but durables stayed buoyant despite recent reports that clothing and shoe sales were not stellar in July. 



Confidence indicators have diverged over the past couple of years. The NIER survey retail sector indicator has recently been boosted by firms' unusually positive view about inventory levels. At the same time, there is a new worrying tendency that firms are less optimistic about future sales. Will that materialise ahead, or are firms spooked by global turmoil? More soft indicators in tomorrow's NIER survey release.



Our 2020 GDP forecast is somewhat below consensus, even after two domestic houses lowered their forecasts yesterday. Still, our outlook hinges on household consumption not collapsing. Today's strong retail outcome is some comfort, but the labour market has been sounding some alarm bells recently. Plus, the view that Swedish households are financially strong will be somewhat revised on September 13, when the national accounts release a major revision of GDP. It turns out that households have not saved as much as previously estimated, but instead spent more abroad. Can household consumption still hold up despite the ongoing cooling of the economy? We think so, but this needs to be monitored closely.






Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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