Sweden’s jobless rate drops in September, unemployment back on gradually declining trend

Sweden’s jobless rate fell below consensus projection in September. Sweden’s unemployment is therefore back on its gradually declining trend, noted Nordea Bank in a research note. Seasonally adjusted jobless rate fell to 6.7 percent, as compared with consensus projection of 6.9 percent and August rate of 7.2 percent. Seasonally unadjusted jobless rate dropped from 6.6 percent in August to 6.1 percent in September. Consensus projection was for the rate to drop to 6.3 percent.

The Labor Force Survey was possibly distorted by statistical issues in the summer. Furthermore, the measurement period for September is different from the previous year’s, pulling down unemployment as compared to 2015. These statistical impacts greatly explain the increased jobless rate of above 7 percent in summer. Therefore, the survey for September shows better trend on the labor market.

In recent times, growth in employment is rising for people born abroad, whereas it has dropped for Swedish-born. This mainly shows demographic effects, said Nordea Bank. Recently, employment has levelled out; however, indicators imply that the demand for labor continues to be high in the near-term.

In September, employment rose by 84,000 year-on-year, as compared with the decline of 1000 in August. Meanwhile, labor force rose by 53,000 people year-on-year in the month, as compared with the rise of 12,000 seen in August.

In the third quarter, unemployment averaged 7 percent, which is more than Riksbank’s estimate of 6.83 percent. But the Swedish labor market developments are expected to be consistent with the central bank’s view, added Nordea Bank.