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Fast Comment SwedenWeek ahead: Unemployment likely recoiled in September

  1. Overall strong labour market, despite unemployment disappointment
  2. We see lower unemployment in September, but the need to lift forecast likely remains
Overall strong labour market, despite unemployment disappointment
Unemployment was surprisingly high in August, but overwhelming evidence suggests that the strong labour market situation is not under threat in the near term. GDP is growing faster than trend, driving up demand for labour. Employment is already very high and looks certain to rise further, as most leading indicators are stronger than normal. Also, September data from the Public Employment Service show that the number of registered unemployed is still on a steady downward trajectory.
We see lower unemployment in September, but need to revise up forecast probably remains
Thursday sees the official unemployment print for September, when the Labour Force Survey (LFS) is published. We forecast a decrease to 6.3 percent, seasonally adjusted. That is still higher than we expected in our August macro forecast report, so an upward revision is likely to come in our upcoming report (on November 7). September unemployment is the last major Swedish data point released before the Riksbank's October meeting. The outcome will not rock the Riksbank's boat. Remember that the Riksbank has long been relatively pessimistic about the LFS unemployment outlook, partly due to the temporary bias that appears to have helped dampen outcomes in recent years (see e.g. our Fast Comment from May 31, 2017).
Housing prices (HOX) also released on Thursday, October 18 (see separate preview)


Unemployment expected to recoil after last month's upside surprise 



The negative monthly change we estimate for September (-0.37 p.p.) would be toward the lower end of the range  



Steady downward trend in number of unemployed registered at the PES 



Leading indicators mostly strong 




Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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