Recovery in Sweden’s manufacturing production likely to continue in near term

Sweden's manufacturing production in January rebounded slightly, rising 0.6% m/m and 4.6% y/y. It was lower than consensus expectations. Order intakes did not rebound from the considerable decline in December, remaining weak. A moderate rebound is underway in the manufacturing. Indicators imply that the recovery will continue in the near term.

Long-term outlook is more uncertain and depends on global developments. Moreover, private service sector production was also weak in January. Overall, the data implies that Sweden's GDP growth will be significantly lower in Q1, as compared to Q4 2015's growth. However, the nation's GDP is likely to expand in Q1 rather than contract.