Swedish manufacturing and services production drop sharply in August

Production in Sweden’s manufacturing industry and in the private service sector dropped in August. It came in quite worse than projection. Service sector production in Sweden dropped in August after recording growth for five consecutive months; however, the downturn was sharper than projection, whereas production has levelled out in recent months, noted Nordea Bank.

Swedish private services production dropped 1.4 percent sequentially in August, as compared with July’s growth of 0.7 percent. Consensus projection was for a rise of 0.4 percent. On an annual basis, services production rose 2.8 percent, as compared with July’s year-on-year growth of 5.3 percent. Consensus expectations were for a rise of 4.5 percent.

Manufacturing production declined 4.1 percent month-on-month, as compared with the rise of 1.5 percent recorded in July. Consensus forecast was for a rise of 0.5 percent. Meanwhile, on year-on-year basis, manufacturing production fell 4.8 percent, as against the consensus expectations for a rise of 0.5 percent. It had grown 5.5 percent in July. Order intake came in awful as well. It declined 9.8 percent sequentially, as compared to a growth of 5.1 percent. On an annual basis, order intake dropped 5.6 percent, as compared with a rise of 5.8 percent.

The production readings are quite disappointing and imply that production in the total business sector, and probably also GDP, dropped in the third quarter from the earlier quarter. However, summer months are uncertain and volatile. Also, manufacturing PMI and services PMI were weak in August, but rebounded in September. Furthermore, production readings have been weak indicators of GDP growth in recent years, according to Nordea Bank.

“We stick to our forecast of some GDP growth for Q3, although downside risks have increased”, added Nordea Bank.