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Fast Comment SwedenBusiness sector production in December

  1. Swedish economy expanded at robust pace in the last quarter
  2. Production data indicates faster GDP than our forecast, but does not take all factors into account
  3. Amidst the equity market doom and gloom, Swedish GDP growth set to remain healthy in the near term
Swedish economy expanded at a robust pace in the past quarter
December data for the Production Value Index (PVI) shows that business sector production increased at a brisk 5.3 percent y-o-y, calendar-adjusted (CA). The outcome was roughly in line with our estimate, and somewhat stronger than the consensus expectations (median: 4.6 percent, y-o-y, CA). Admittedly, the monthly change was negative and weaker than expected (-1.0 percent, m-o-m, seasonally adjusted, vs. our estimate of -0.1 and consensus of -0.3). But the fall is merely a rebound from the now upward revised November production.
Production data indicates faster GDP than our forecast, but does not take all factors into account
For more than a year, the production side of the national accounts calculations has pointed to faster GDP growth than the demand side. Statistics Sweden's figures ended up, pinning down growth somewhere in between these calculation inputs. We believe this will continue when the fourth quarter is presented on February 28. Two factors that likely drag down the demand side GDP calculation are a rebound in the volatile R&D investments and a cooling trend in housing construction. We will get more clarity on the last point on February 19 when construction data for Q4 is unveiled.
Amidst the equity market doom and gloom, Swedish GDP growth set to remain healthy in the near term
Stock markets are falling, but Swedish GDP is expected to remain healthy in the near term. Orders as well as sentiment indicators are still at high levels. In many cases, they point to GDP growth picking up further in the first quarter from an already strong expansion in the last quarter of 2017.


Much like our GDP forecast for the near term, the PVI points to an acceleration 



PVI still trending above GDP growth and national accounts data on business sector value added



Both order data and survey indicators show business sector production stays solid in the near term


Source: Macrobond





Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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