Swedish production in the business sector came in soft in October, indicating towards sluggish GDP growth in the fourth quarter.
Sequentially, business sector production grew 0.2 percent. However, data for previous months were downwardly revised, and production was up by a mere 0.4 percent year-on-year. The outcome was below expectations.
Production in the manufacturing industry dropped, and order intake fell as well. Production rose in the private service sector sequentially but has been roughly unchanged since the start of the year. Meanwhile, construction sector performed better than expectations, but risks are skewed towards downturn going forward.
Overall, there is an even weaker start on the fourth quarter GDP than anticipated. Indicators are gloomy, suggesting that production readings will continue to be sluggish in months ahead, said Nordea Bank in a research report. There is a risk that GDP growth year-on-year will be zero in the fourth quarter.
“The timing is awkward and it is not a done deal, but the Riksbank will probably hike rates later this month”, added Nordea Bank.
