Confidence indicator for Swedish economy rises in December on rise in manufacturing confidence

The sentiment indicator for Sweden’s total economy (ESI) increased in December. The indicator rose from 108.8 in November to a full 113.8 in December. The ESI is in line with a GDP growth of about 5 percent for the fourth quarter. A surge in confidence in the manufacturing industry mainly led to the upturn in the ESI. Sentiment in manufacturing industry rose to 121.1. Noticeably, the sentiment in manufacturing was at the same levels one year ago. Meanwhile, manufacturing production did not take off, noted Nordea Bank in a research report.

Confidence also improved in the private sector, which showed a rise from 106.5 to 108.7. Meanwhile, sentiment dropped in construction, retailers and household to 108.8, 101.8 and 103.2 respectively. Employment plans continued to remain positive.

Households’ average inflation expectations dropped from 2.4 percent in November to 2.3 percent in December. Retailers’ price plans indicated minor changes and rose slightly; however, it is surprisingly low given the weak SEK, stated Nordea Bank.

Overall, sentiment continues to surprise on the upside. The rise in manufacturing industry is to be taken with a pinch of salt, but most of it implies that the economic growth rebounded in the fourth quarter, said Nordea Bank.