Swedish Confidence Declines to Four-Year Low Amid Slowdown

(Bloomberg) -- Swedish overall confidence levels dropped to their lowest levels in 4 years in May, as consumers and manufacturers are getting increasingly worried over the economy cooling.

The Economic Tendency Indicator dropped to 99.8 from April’s revised reading of 102.5, the National Institute of Economic Research in Stockholm said on Tuesday. A survey of economists by Bloomberg had pointed to a median estimate of 101.9.

• According to NIER, manufacturing confidence dropped to 103.7, still above the historical average, “pointing to a stronger situation than normal,” according to NIER.
• Confidence among consumers fell to 91, the lowest level in more than six years, as households are “more negative about both their personal finances and major purchases.”
• The data comes a day ahead of the publication of first quarter gross domestic product data with growth expected to drop to a meager 0.2% in the first three months of the year. The annual expansion likely slowed to 1.7%, weighed down by a decline in housing investments.
• The overall tendency indicator is based on monthly surveys of approximately 6,000 companies and 1,500 households. A reading above 100 indicates a stronger than normal economy, while values between 90 and 100 show a weaker than normal economy. It has been consistently above 100 since the middle of 2015.

What Economists Say

• Stefan Mellin at Danske Bank said the overall NIER data (except retail) were “poor and should be negative for the krona.”
• Olle Holmgren at SEB said that the data were a rather big disappointment for households, but as expected for industry. The data adds downward risk to SEB’s growth forecast this year, he said.

Market Reaction

• The krona pared some gains and was trading at 10.69 per euro at 09:15 a.m.

Know More

• For more, see this table

To contact the reporters on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net;Amanda Billner in Stockholm at abillner@bloomberg.net

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

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