Swedish wages rise below expectations in February, wage inflation likely to remain low

Swedish wages rose below projections in February. Wages were up 2.5 percent in January and rose 2.4 percent in February, showed the Mediation Office.

Recently, the Swedish central bank, Riksbank, downwardly revised its projection, but probably not enough, noted Nordea Bank in a research report. There is no major deviation, but the central bank’s projection of 2.7 percent for the whole of this year appears quite high.

Wages in the public sector were higher than average last year; however, lower in the business sector in the initial two months of 2019. If anything, the trend in the business sector has been downwards for the last 6 months.

Swedish wage inflation is expected to remain low. The labor market has begun cooling off, hampering wage drift.

“We fear that employment in the manufacturing industry will decline later this year, which is important ahead of the wage agreements that will be signed next spring. The manufacturing industry sets the benchmark, and we see wage agreements at the same rather modest level as in the previous pay-round, underlining the Riksbank’s challenge to stabilise inflation at the 2 percent target”, added Nordea Bank.