Swedish manufacturing production drops in April, likely to rebound going forward – Nordea Bank

Sweden’s production data for the month of April came in below expectations, particularly for manufacturing industry. Manufacturing production dropped in the month by 2.4 percent sequentially, as compared with consensus expectations of a rise of 0.4 percent. On a year-on-year basis, the production rose 0.8 percent, a slowdown from March’s downwardly revised figure of 3.8 percent and below consensus expectations of a rise of 4.1 percent.

Furthermore, order intake was subdued and was downwardly revised for March. Particularly production in the vehicle industry fell in April. Order intake dropped 0.4 percent sequentially and rose 4.4 percent on a year-on-year basis.

The subdued figures for April are contrary to anecdotic evidence and soft indicators as well. Furthermore, order intake is decent in spite of the weakness recorded in recent months. Still, the manufacturing industry is expected to see some growth, although it might be slightly slower than previous estimate, noted Nordea Bank in a research report.

Meanwhile, private services sector production came more in line with expectations, although also on the low side. Service sector production and the forward-looking indicators are healthy.

It should be highlighted that the monthly production readings have been a poor guide for the economic growth, stated Nordea Bank. For example, production rose sharply in the first quarter, while GDP data was weak. Thus, the production readings should be taken with a huge bucket of salt, stated Nordea Bank.