Swedish service sector weakens in February, Q1 GDP growth to slow markedly

In February, production in Sweden’s service sector fell on monthly and also on annual basis. It was much lower than projection. Admittedly, service sector production has been unexpectedly weak in recent months. But, figures are jumpy, and even if the indicators have weakened slightly, they indicate towards healthy expansion, according to Nordea Bank. Sweden’s private services production declined 0.5% m/m and 0.2% y/y.

Further disappointment was manufacturing industry. Production in manufacturing sector continued to be the same in February after posting slow growth in December and January. The country’s manufacturing production grew 3.8% y/y, as compared with consensus expectation of 4%, and 0.1% m/m, as compared with consensus projection of 0.3%. Order intake also declined, raising uncertainty about the outlook. Export orders also continued to fall. Order intake dropped 3.1% m/m and rose 2% y/y.

Overall, today’s release implies that Swedish economy is likely to slow noticeably in Q1, and that projections for Q1 GDP growth might have to be lowered, noted Nordea Bank. However, it added that it is too soon to turn negative since domestic economic indicators continue to be strong and global economic indicators appear to be recovering.