Swedish wages rise below expectations in August

Swedish wages were a disappointment in the month of August. According to the Swedish Mediation Office estimate, wages in Sweden rose just 2.5 percent on a year-on-year basis. There are few signs of any acceleration in wage pressures.

The 2.5 percent print for the total labor market is slightly below the expected 2.6 percent. The average for the initial eight months of the year came in at 2.6 percent, as compared with last year’s 2.3 percent. Wage rises in the business sector rose in the beginning of 2018; however, it has levelled off in recent months.

The Swedish Riksbank’s projection for FY 2018 at 2.6 percent remains reasonable, noted Nordea Bank. However, the low readings in recent months, along with labor market parties’ low wage expectations, should be a worry for the central bank.

“Modest wage increases support our view of inflation dropping next year when the effects of the weak SEK fades”, stated Nordea Bank.