Swedish economic sentiment indicator falls in October

The Swedish Economic Sentiment Indicator dropped in October. The fall was widespread. Employment plans fell while labor shortage rose. The overall Economic Sentient Indicator fell to 108 from 111.2. The indicator remains at a healthy level; however, the October reading was the softest since early 2017.

Confidence dropped in all sectors. Indicators for all the labor market came in mixed. Employment plans fell while labor shortage rose to a new all-time-high. Retailers’ price plans fell, indicating that the impacts of the soft SEK have peaked.

Consumer sentiment fell to just below its historical average. Stock market turbulence probably was a drag on sentiment. Household’s inflation expectations dropped to 3.2 percent in October.

Overall, sentiment is still at decent levels, but the fall in October is a warning sign that growth is decelerating and time is running out for the Riksbank, noted Nordea Bank.

“The bank will probably hike rates around the turn of the year, but we expect it to be a one-off hike”, added Nordea Bank.