Swedish jobless rate, on a seasonally adjusted basis, came in at 7.1 percent in July, much higher than anticipated. Employment dropped on the month by 0.7 percent sequentially and fell 0.8 percent year-on-year. The employment trend has been gloomy in the first half of 2019, and indicators imply that this trend will continue throughout the fall, noted Nordea Bank in a research report. The employment rate also continued down and is noticeably below the central bank’s forecast. The labor supply was mainly flat on the month.
Overall, the July labor report was quite soft and affirms that the labor market is deteriorating. A softer labor market might also effect the big wage negotiation rounds coming up early next year, increasing the possibility of another three-year period with modest wage growth.
“The Riksbank will have to reconsider their view that the labour market is strong. The resource utilisation is falling, which means that rate hikes will be off the table for a long time. If anything, the probability of more stimulus from the Riksbank is increasing”, added Nordea Bank.
