Swedish household consumption rebounds marginally in August

Sweden’s household consumption rebounded marginally in August after falling sharply in July. On a sequential basis, consumption rose 1.5 percent in August after falling 2 percent in July. On a year-on-year basis, consumption remained almost unchanged at 0.3 percent, in spite of the rise from July.

The rise was driven by some temporary factors over the summer. The changed regulations for cars is the most significant factor, stimulating car sales in the second quarter with a reversed effect in the third quarter. Furthermore, the unusual warm weather possibly kept households away from the shopping malls.

Car registrations came in low even in September. For the third quarter, they dropped sharply by 50 percent from the second quarter, subtracting nearly 1 percentage point from total household consumption in the third quarter. This signifies that household consumption possibly fell in the third quarter sequentially.

“Although car and retail sales as well as total consumption should recover in Q4, the Riksbank’s forecast for households’ consumption at 2.7 percent for the full year of 2018 looks too high. Notably, the NIER’s fresh forecast is 2.1 percent for 2018”, stated Nordea Bank in a research report.