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Fast Comment SwedenApril sees extreme fall in unemployment after surprisingly bleak first quarter

  1. Employment growth picked up substantially, as unemployment beat expectations by a mile
  2. Cautiously optimistic that labour market strength will continue through 2019, as forecast
  3. But eventually unemployment will take a turn for the worse as the economy continues to cool in 2020-21
Employment growth picked up substantially, as unemployment beat expectations by a mile
The April Labour Force Survey data shows unemployment significantly lower than we had expected, and even further below analysts' consensus view (outcome 5.9 / our nowcast estimate 6.4 / Bloomberg consensus 6.5 percent seasonally-adjusted). Employment picked up after a bleak first quarter, putting labour market developments back more in line with our forecast from our April Global Macro Forecast report. We are moderately positive about unemployment this year, not expecting the deteriorating economic climate to really dent unemployment until around year-end.
Cautiously optimistic that labour market strength will continue through 2019, as forecast
Rising unemployment in March stirred up a worry that we might have misjudged the strength in the labour market situation. While the April data again points to lasting labour market strength, we note that not all leading indicators support employment going forward. One recent positive is that summer temping jobs look set to reach a new record high, according to Public Employment Service data.
But eventually unemployment will take a turn for the worse as the economy continues to cool in 2020-21
Please see charts below.



The April data brings unemployment back more in line with our forecast

 


Source: Macrobond



April unemployment fall an extreme observation, following an unusually large increase in March - further evidence that monthly LFS data must be handled with care (remember the LFS is designed to produce quarterly statistics!)




Employment growth picked up, and there may be more upside to temporary employment in the near term, as advertised summer temping jobs have hit record highs this year  


Source: Macrobond



Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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