Sweden's Jobless Rate Rises as More People Join the Workforce
(Bloomberg) -- Swedish unemployment rose for a second month in December as job seekers flocked to the labor market at the tail-end of a long economic expansion.
The seasonally-adjusted rate rose to 6.4 percent, up from a revised 6.2 percent in November, Statistics Sweden said on Thursday. Economists surveyed by Bloomberg had expected a rate of 6.2 percent in December.
- Swedish unemployment remains above its pre-global financial crisis levels and above the rates seen in neighboring Denmark and Norway.
- Sweden has seen a large inflow workers, spurred by record immigration, which has been adding to labor force as employment has grown. Sweden has added more than 100,000 jobs over the past year, while the labor force has grown by about 90,000.
- Still, economists have been cutting their 2019 growth forecasts for Sweden, and there was some recent bad news from the business sector, which saw hiring plans fall in December to their lowest level since 2014.
- After the longest political standoff in its history, Sweden finally got a new government this week, consisting of the Social Democrats and the Green Party and with the support of two centrist parties. Prime Minister Stefan Lofven has placed job creation high up on the agenda, but has abandoned a previous goal of reaching the lowest unemployment rate in the EU by 2020.
- The country’s central bank expects unemployment to stabilize above 6 percent over the next 12 months.
What Economists Say
- Nordea economist Torbjorn Isaksson noted that the higher-than-expected unemployment reading was due to the labor supply rising more than forecast. “The labor market is still very tight, which will ease concerns over the slowdown in GDP growth. However, we fear that demand for labor will start to decline soon,” he said in a note.
- “The labor market ends 2018 on a strong note, but unemployment seems to have reached the bottom. No impact on the Riksbank,” said Knut Hallberg at Swedbank.
- Stefan Mellin at Danske Bank called it “a fairly strong report, although our impression is that unemployment may be starting to find a bottom.”
- Johan Lof at Handelsbanken said the bank was sticking to its outlook of higher unemployment going forward despite an “overall improvement” in the final quarter of 2018.
- For more details, see this table
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