The Swedish Economy
Monthly letter from Swedbank’s Economic Research Department, continued No. 6 • 22 November 2012
The biggest decline has been in exports to eurozone countries, although demand from otherregions also weakened in the early fall. Thisconfirms the impression of a broad-based globaleconomic slowdown. Moreover, exports of inputand capital goods are being increasingly affected,especially exports of ferrous and nonferrous metals,vehicles and wood products. The September datapointed to a rise in export orders for investmentgoods, however, which is possibly a sign that theexport decline has eased.
Household demand limits downturn
While demand from the outside is weakening,internal demand is holding up somewhat better.Household consumption, as reflected by retailsales, seems so far fairly robust. In Septemberretail sales rose, notably sales of durable goods,although consumables also gained. Passenger carsales turned slightly higher, but still trail last year.Through August, about 10% fewer new cars wereregistered compared with the same period last year.At the same time demand from businesses hasdecreased. Domestic manufacturing orderscontinue to shrink, according to Swedbank/SILF’spurchasing managers index. Lower capacityutilization and growing inventories of late suggestthat the slump in domestic demand will continue.
Retail sales and manufacturing domestic orders, Jan 2005 –Oct 2012
Sources: Statistics Sweden and B and Swedbank
As a whole, production volumes in manufacturingand the service sector have declined, mostnoticeably in industry. The service sector is slightlymore resilient, but also diverging. Auto sales andbusiness services are shrinking, while computerconsulting services and telecom are growing. Inmanufacturing, auto and timber production inparticular are slowing.
Manufacturing production and service production
(Index 2005 =100, seasonally and calendar adjusted)Source: Statistics Sweden
Continued economic downturn increasesthe pressure on the labor market
The weaker economy is also raising concerns in thelabor market. Many companies have recentlydeemed it necessary to increase the number ofnotice of layoffs to be prepared should demandcontinue to fall. The number of temporary workersis also being reduced. In addition, the publicemployment service (Arbetsförmedlingen) reports adeclining number of available jobs.
Labor market indicators, Jan 2006 – Oct 2012
Sources: Statistics Sweden and Public Employment Service
At the same time underlying labor market statisticsremain unexpectedly strong. Hours worked inOctober was largely unchanged year-on-year, whileemployment rose compared with September inseasonally adjusted terms. The employment ratio of65.5% was unchanged from October 2011. Thelabor supply rose however at the same time, whichmeans that the unemployment rate did not changemarkedly during the month; 7.7% (seasonallyadjusted).
010203040506070-4-2024681012 jan-05 dec-05 nov-06 okt-07 sep-08 aug-09 jul-10 jun-11 maj-12Detaljhandeln (årl. förä. i %, 3m)Orderingång hemmamarknaden (PMI, sr, hs)80859095100105110115120Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12ServicesManufacturing
02000400060008000100001200014000160001800020000-4,0-2,00,02,04,06,08,010,02006 2007 2008 2009 2010 2011 2012Employment (ann.change in %)Unemployment (% oflabor force)Notice of layoff (persons,rs)