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Swedish jobless rate rises in April, domestic cost pressures likely to remain muted

Sweden’s jobless rate rose in the month of April, consistent with Riksbank’s forecast. On a seasonally adjusted basis, unemployment rate rose to 6.3 percent from March’s 6.2 percent. Consensus expectations were for the jobless rate to fall to 6.1 percent.

Employment remained the same over the month, as compared with the expectation of a modest increase. Labor supply rose in line with expectations. Overall, the report was healthy although not solid. The continued low jobless rate might give the Swedish central bank faith in higher wage growth. However, so far, wage growth has been modest and noticeable rise is unlikely going forward, noted Nordea Bank in a research report.

The domestic economy is losing steam, labor shortages have likely peaked and wage expectations continue to be rooted at modest levels. These factors imply that the domestic cost pressures would continue to be muted, underpinning the view that the Riksbank will remain side-lined until the fourth quarter of 2019, added Nordea Bank.

The government’s goal of reaching the lowest jobless rate in the EU remains distant. In fact, the distance to the best performing nations in the EU has increased in the past few years.

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