Swedish May Retail Sales Decline Twice as Much as Estimated

(Bloomberg) -- Swedish retail sales posted the biggest annual drop since 2011, adding to evidence of a deepening slowdown in the largest Nordic economy and mounting challenges for the central bank.

Retail sales fell 0.5% on an annual basis in May, after a revised gain of 3.7% in April, and plunged 2.0% in the month, Statistics Sweden said on Friday. Analysts surveyed by Bloomberg had estimated a monthly drop of 1.0% and an annual rise of 2.3%.

Key Insights

• Friday’s data follows an Easter-related jump in sales and comes amid a significant drop in confidence levels and a worrying uptick in unemployment.
• Sluggish demand among households is one of many concerns for the Riksbank’s board as it gathers for its July meeting on Tuesday. Many economists are seeing a high probability that the Riksbank will have to lower its repo rate forecast at the meeting.
• A separate report showed wage growth was a subdued 2.5% in April.

What Economists Say

• Marcus Widen at SEB said the data was much weaker than expected, adding that “this number might raise some further concerns about consumption. While it corresponds to a dampened consumer confidence to some extent, we don’t see the reason why Swedish households should be this pessimistic.”
• Knut Hallberg, an economist at Swedbank, said that the “really weak” and disappointing retail sales data are “no fun‘” for the Riksbank.

Market Reaction

• The currency fell as much as 0.14% and was trading at 10.55 per euro as of 10:44 a.m.

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• For more details, see this table

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

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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