Swedish economic sentiment indicator remains stable in September, survey hints at sluggish growth

Swedish September Tendency Survey continues to hint at sluggish growth. Export demand is eroding and households are hesitant. The Riksbank has to reconsider its view on the economy and there its monetary policy stance.

The Economic Sentiment Indicator stayed stable at 94.6 in September and thus well below its historical average, hinting at soft GDP growth. The consumer sentiment dropped to 90.6, the lowest reading since 2012. Not least are households worried about the situation on the labor market.

Manufacturing sentiment rose, but details are much worse than the headline reading implies. Production plans deteriorated and order intake from export markets declined. The private sector is negative, while retailers and construction and more positive. Employment plans dropped. Firms that are cutting staff are in majority, but employment plans are nevertheless more positive than hard data.

Retailers’ price plans are dropped. Households’ inflation expectations rose, which is one of the few positive news for the Riksbank.

“All in all, the survey was weak, in line with expectations. Indicators for the labour market are mixed. Employment plans are less bad than hard data while households are concerned over the situation on the labour market. The bottom line is that the Riksbank is too optimistic on pretty much everything”, said Nordea Bank.