Swedish Confidence Levels Drop for Fourth Month as Slump Deepens

(Bloomberg) --

Swedish confidence levels declined for a fourth month in a row in August, providing more evidence that the domestic and global slowdown is starting to catch up with consumers and businesses in the Nordic region’s biggest economy.

The Economic Tendency Indicator fell to 94.9, from July’s revised reading of 96.4, the National Institute of Economic Research in Stockholm said Thursday. That missed the median estimate of 96 in a survey of economists by Bloomberg.

Key Insights

• Manufacturing confidence fell to 94.8 and consumer confidence dropped to 94, missing economists’ estimates of 96.5 and 96.8, respectively.
• The data cast further doubt on the central bank’s plan to raise interest rates toward zero by the end of the year, exiting more than four years of negative rates.
• A growing number of economists are forecasting slower growth for the Swedish economy, with both SEB and Swedbank cutting their GDP forecasts this week.

What Economists Say

• Johan Lof at Handelsbanken said the NIER index was likely acting as the proverbial canary in a coal mine, “underscoring the risk of a deepening and widening cool-down.” Lof ruled out a full-blown recession for the time being.
  Olle Holmgren at SEB said the continued decline in the NIER index poses “a downside risk for our growth forecasts. The survey still signals growth but is getting close to recessionary levels.”
• Knut Hallberg at Swedbank said the weaker than expected data from NIER made for a “negative reading for the Riksbank."

Market Reaction

• The krona fell 0.07% to 10.7808 per euro as of 9:25 a.m.

Know More

• For more, see this table

To contact the reporter on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Nick Rigillo

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