Swedish retail sales rise weakly in February

Swedish retail sales came in line with expectations in February. The sluggish beginning of the year raises questions about domestic demand.

Retail sales in February rose 0.3 percent on the month and rose 1.5 percent on a year-on-year basis, coming in line with forecasts. Since the start of this year, retail sales have been subdued. Sales rose by a mere 0.5 percent since October. Taking population growth into account, retail sales were virtually unchanged over the year in February.

The obvious question and worry is whether the housing market development is being a drag on consumption. However, the recent retail sales figures look slightly too weak and sales are expected to rebound a bit in the months ahead.

“The bottom line is that there is uncertainty regarding the domestic demand. The Riksbank’s forecast for household consumption at 2.9 percent for FY 2018 looks too high. Slowing growth is yet another reason for the Riksbank to stay on hold”, noted Nordea Bank in a research report.

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