Sweden’s household consumption falls in September, economic growth likely sluggish in Q3

Sweden’s household consumption dropped in September, while business sector production rebounded in the month.

The nation’s household consumption fell 0.2 percent in sequential terms, as compared with 0 percent in the prior month. On year-on-year basis, consumption rose 1.5 percent, a slowdown from 2.5 percent growth in August. The outcome was consistent with what could have been anticipated given the sluggish retail trade and car sales, noted Nordea Bank in a research note.

Growth in consumption has been decelerating in 2016. Today’s data indicated that food store sales were subdued in October, dropped 1.3 percent year-on-year. This showed that retail sales continue to be weak.

It is evident that consumers appear hesitant. But there might be certain weather related and temporary factors at play in the recent months, according to Nordea Bank. In the third quarter as a whole, consumption rose 2.3 percent year-on-year, just lower than the Riksbank’s call for FY 2016 at 2.4 percent.

Meanwhile, production in the business sector rebounded in September, rising 2.4 percent sequentially. It had dropped 2.8 percent in August. On an annual basis, business sector production grew 2.9 percent, acceleration from 1.2 percent growth in August. For the third quarter of 2016, production fell 0.1 percent quarter-on-quarter.

Overall, the third quarter data implies a weak Swedish economic growth in the September quarter. There is certain uncertainty regarding consumers; however, weak indicators point towards some pickup in the GDP growth in the fourth quarter, stated Nordea Bank.