Sweden’s jobless rate grew unexpectedly in February as employment disappointed. Unemployment is above the Riksbank’s view. February’s seasonally adjusted jobless rate reached 7.1%, more than consensus expectation of 7%. Meanwhile, employment increased below forecast, while labor supply was on par with expectations. In January and February, unemployment averaged 7%, more than Riksbank’s projection for Q1 of 6.9%.
Sweden’s GDP growth is booming, while labor market indicators continue to be positive. There is no reason for concern regarding the demand for labor. The below expected data for February is mainly a statistical noise, but matching problems also matter and are a source of concern, hampering employment growth.
For the central bank, the above expected reading of unemployment rate is not much of a deal as it is almost certain that the Swedish economy is strong. The Riksbank, instead, is possibly keeping a close watch on the exchange rate. The SEK is at the time of writing 1.3% stronger than the central bank’s forecast. This trend is expected to continue. The central bank might prevent this by extending the QE program.
