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Fast Comment SwedenAugust business sector production brushing aside PMI scare, for now

  1. Better-than-expected growth outcome, with strong details
  2. But comfort may be short-lived as orders data continue to be poor
  3. Riksbank has been too optimistic; reaction to be expected at October meeting

August business sector production better than expected, both in the last month (we estimated -0.2 percent m-o-m) and over the last year, following significant upward revisions to May and June


Manufacturing stayed healthy after good July print, and services kept picking up in August


Source: Macrobond

However, growth worries are not over, as Statistics Sweden's gauge of new manufacturing orders stays weaker than normal. Admittedly, not as dreadful as the most recent PMI manufacturing orders print, but at the same time all order measures now signal production deceleration or even contraction going forward. The Riksbank and the government therefore appear too optimistic about the economy. We will release a new macro forecast report tomorrow, October 9, where we will keep our below-consensus GDP forecast for 2020. Furthermore, we stick to our long-standing view that the Riksbank will call off rate rises, and now we see that starting at the October meeting. A rate cut remains unlikely.



Johan Löf

Senior Economist


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