Swedish household consumption stagnated in April. Furthermore, the trend is likely to be even weaker than the monthly data imply, notes Nordea Bank in a research report. Sequentially, household consumption rose just 0.2 percent and was unchanged on a year-on-year basis. The outcome was softer than expected given the uptick in retail sales and increased car registrations. The figures released were soft, considering that the Easter holiday stimulated food sales.
Furthermore, the net of tourism is not included in the monthly consumption figures. The soft SEK has lowered Swedish households’ tourism abroad while foreigners have visited Sweden to a greater extent, dragging on consumption. In the first quarter, the effect of total consumption was -1 percentage point year-on-year.
There is a possibility that the net of tourism reduced consumption also in the second quarter. Therefore, the consumption trend is expected to be even weaker than the monthly data suggest.
“The reason to the weak consumption and higher savings is probably the uncertainty related to the housing market as well as the volatile stock markets. We expect consumption trend to improve going forward but nevertheless be weaker than the Riksbank’s rather optimistic view on consumption”, added Nordea Bank.
