Swedish manufacturing production grows in November, likely to expand fairly in near term

Sweden’s November production figures have come out quite mixed. The nation’s manufacturing sector appears to be rebounding, but the larger private services sector is stagnant. However, increasing business confidence in Sweden and abroad indicates towards a decent growth in the December quarter.

Manufacturing production in November grew 1.2 percent on a sequential basis and just 0.1 percent on a year-on-year basis. This was greatly consistent with consensus forecast of 0.1 percent year-on-year growth and 1.2 percent sequential growth.

Meanwhile, order intakes remained the same over the months; however it declined on an annual basis because of base effects. Order intake dropped 3.1 percent year-on-year in November. The trend appears to be positive in manufacturing production and also in order intakes. It implies that a rebound has probably taken place in the fourth quarter, said Nordea Bank.

However, the services sector has not performed that well. The slight rise in November was below expectations and does not change the picture of a stagnant trend since spring 2016. On a sequential basis private services production rose 0.4 percent, as compared with market expectations of 0.5 percent growth. But the annual growth in services sector was strong, growing 3.6 percent. However, the year-on-year growth also came in weaker than consensus expectations of 4.2 percent.

In all, the monthly production readings imply that production in the total business sector came in rather subdued in the fourth quarter. But weak data like business surveys indicate towards a decent growth in both the manufacturing sector and the private service sector in the near term, added Nordea Bank.