Swedish Confidence Indicators Return to Pre-Pandemic Levels

(Bloomberg) -- Swedish confidence indicators rose for a fifth consecutive month in September, to levels not seen since the outbreak of the coronavirus pandemic.

The overall economic tendency survey rose to 94.5, from a revised 87.6 in August, the National Institute of Economic Research said Tuesday. That is the highest level since February, before the pandemic sent sentiment plunging to an all-time low.

Unlike its neighbors and much of the rest of Europe, Sweden did not shut down its economy when Covid-19 struck, relying instead on mostly voluntary restrictions. That’s resulted in a relatively smaller economic hit, with the central bank now forecasting a contraction of 3.6% this year.

According to NIER, the consumer confidence index rose to 88.3, its highest level since the pandemic broke out, while the manufacturing confidence index rose to 105.8, it’s highest level in more than a year.

Some of the biggest monthly increases were seen in the retail sector, which suffered badly despite shops being kept open.

Analysts cautioned against reading too much into the data, with Danske Bank strategist Michael Bostrom saying he expected weak current European data to feed into future Swedish confidence readings.

Torbjorn Isaksson at Nordea Bank also warned that the latest survey was carried out before the spread of the virus started to rise again.

“Nevertheless, the recovery currently looks stronger than our relatively optimistic forecast,” Isaksson said.

The confidence data comes on the back of a rising PMI and unemployment falling back from its June peak.

Sweden’s krona inched lower, to a day low of 10.5666 per euro, shortly after Tuesday’s release.

©2020 Bloomberg L.P.