Swedish retail sales rise below expectations in December, consumption growth likely to slow down

Swedish retail sales came in below expectations in December. On a year-on-year basis, retail sales grew 3.3 percent, as compared with projections of 4 percent. The downturn on the month by 1.4 percent came after the upwardly revised 1.7 percent sequentially in November and decent readings for the earlier months, and the rising trend for retail sales remain intact.

Short term indicators are positive, while sales are expected to rise further in the near term, noted Nordea Bank in a research report. But longer out households are likely to tighten their spending and consumption growth is expected to slow on the back of uncertainty related to the housing market.

Meanwhile, figures indicated that household credit growth decelerated in December. It fell from November and the year-on-year figure fell to 7 percent from 7.1 percent in November. The data are volatile, but the deceleration might be the beginning of a new trend.

Sweden recorded trade balance at a deficit of SEK 1.7 billion in December, below the deficit of SEK 1.4 billion seen in December 2016. Exports of goods fell sequentially while the trend is strong. Exports are expected to be a more significant driver of growth going forward while growth in domestic demand is likely to decelerate, stated Nordea Bank.

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