Swedish jobless rate drops more than expectations in August, employment to continue to rise

The Swedish jobless rate dropped by more than expectation in August as employment surprised on the upside. Moreover, labor supply reached a new high since the early 90’s. After the subdued reading in July, the labor market report for August came in strong. Employment was up 148k over the year, which was better than Nordea Bank’s expectation. The labor supply was consistent with expectations, while the participation rate reached its highest reading since 1991.

Swedish jobless rate, seasonally unadjusted, came in at 6 percent, as compared with the consensus projections of 6.2 percent and the prior month’s figure of 6.6 percent. On a seasonally adjusted basis, the jobless rate came in at 6.6 percent, as compared with consensus expectations of 6.8 percent and prior month’s print of 7.1 percent.

The figures released today are in line with Riksbank’s forecast. The central bank’s projection shows that the jobless rate would be at 6.7 percent in the third quarter and that it would stabilize at 6.6 percent in the coming years.

NIER’s business tendency survey shows that companies’ employment plans continue to be positive and that labor shortage has increased further, indicating that employment would continue to rise, stated Nordea Bank.

Overall, a continued tight labor market gives the central bank hope that wage growth would rise, which in turn should raise inflation. However, wage rises have been modest so far.

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