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Sweden CommentPreview of super week for Swedish macro data

  1. Strong GDP growth with risks tilted to the upside
  2. And the good times will keep rolling, for now
  3. Could someone please tell the wage data about what's going on?
Strong GDP growth with risks tilted to the upside
The third quarter data for the national accounts (NA) are due on Wednesday, November 29. We expect stronger-than-average GDP growth, but since we finalised our forecast in October, several indicators have continued to perform well. One important example is Statistics Sweden's new Production Value Index - a monthly indicator of business sector value added - that signals an acceleration in growth in the third quarter. In light of the strong indicators, we see our forecast as probably being on the low side (our estimate 3.1 / 0.6 percent, y-o-y calendar adjusted (CA) / q-o-q seasonally adjusted (SA)). One interesting factor in the third quarter NA will be the performance of gross capital formation excluding housing investment. Lately, business investment growth has picked up and there are signs of continued improvement, which is welcomed given that building starts are stagnating, meaning that housing investment will stop growing over the coming quarters, all else being equal. More news on the investment outlook follows on Thursday, when the Statistics Sweden Investment Survey is published.
And the good times will keep rolling, for now
The November batch of sentiment indicators from the business and consumer surveys by the National Institute of Economic Research (NIER) will also be released on Wednesday morning. The uncertainty about the housing market is likely to have started affecting consumer confidence (CCI) now, but we do not expect any dramatic developments, as many fundamental factors remain strong, particularly continued job creation (our estimate: CCI to edge down to 103). Manufacturing confidence (MCI) will remain elevated on the back of surging growth in the eurozone and other export markets, in our view, but some downward correction appears likely; we have pencilled in a reading of 119. Based on this, the overall Economic Tendency Indicator (ETI) should stay buoyant at 112. Also, due to recent optimism, we expect retail sales in October to have remained on a firm growth path (due tomorrow, Tuesday, our estimate: 3.9 percent, y-o-y CA).
Could someone please tell the wage data about what's going on?
Internationally, wages have been considered surprisingly weak over the last few years. Sweden is a typical example, where growth and labour market improvements have been fast, but wages muted. So, why are wages not responding? The answer might well be that they actually are. This week, we will get two more pieces of the puzzle, both the full labour cost calculation of the NA, and on Thursday, the monthly data on hourly wages. Unit labour costs have been picking up and hourly wages are now rising faster than the current central agreements.

GDP growth appears to have accelerated in the third quarter

 Capacity utilisation now at pre-crisis level, underscoring the need for investment

Manufacturing sentiment at historical highs

Source: Handelsbanken and Macrobond

The ETI Points to acceleration in GDP growth ahead,
but there has been an unusually long discrepancy between the two

Source: Handelsbanken and Macrobond

Labour costs rising with resource utilisation,
and monthly data on hourly wages now show signs of wage drift


Johan Löf

Senior Economist


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Fast Comment Sweden