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Fast Comment SwedenBusiness sector production in October: Growth starts Q4 in surprisingly strong fashion

  1. Production growth rebound; a tentative pickup after bleak Q3
  2. Services revised upward and manufacturing appears robust
  3. Industrial orders add to our view that economic boom has more to give
Production growth rebound; a tentative pickup after bleak Q3
The October Production Value Index beat expectations and expanded by 1.1 percent m-o-m (our estimate and consensus: 0.2 percent). Following an upward revision to the third quarter, annual growth was even more surprising. This signals a pickup in Swedish GDP growth after the negative print in Q3.
Services revised upward and manufacturing appears robust
Compared to last month's release, the third quarter has been revised upward substantially, mainly driven by the services sector, which also looks optimistic in today's December PMI. The revision likely means that Q3 GDP growth will be revised upward. However, remember that Statistic Sweden has a two-way approach with both the production side and the demand side feeding into the National Accounts. Hence, the revision to Q3 GDP is likely to be quite limited.
Industrial orders add to our view that economic boom has more to give
In line with recent PMI and NIER survey prints, industrial orders were strong in today's October data. This bodes well for growth in the near term. Our forecast is for GDP growth to slow only gradually during the coming two years, meaning that 2019 will be another year of rising employment and good economic climate.

Substantial upward revision gives the impression of reaccelerating growth 



Upward revision will spill over to GDP, but the Q3 revision will likely be limited 



Services an important driver, while construction is a drag on growth 


Source: Macrobond


New orders signal that manufacturing growth will stay above trend in the near term 



Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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