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Swedish jobless rate falls in April, stagnating employment likely to continue

Swedish jobless rate dropped in the month of April. On a seasonally adjusted basis, unemployment rate dropped to 5.9 percent, as compared with consensus expectations of 6.5 and previous month’s print of 6.7 percent. March’s soft reading had created some uncertainty regarding the strength of the labor market; however the Labor Force Survey for April came on the stronger side.

Total employment came in at 5.136 million people in April, rising from 5.098 million people the previous month and above the forecast of 5.114 million. It rose by 93,000 compared to April 2018. Meanwhile, the labor supply dropped with -0.3 percent sequentially, explaining the solid fall in joblessness.

Labor Force Survey figures are volatile. Nevertheless, companies’ employment plans and vacancy figures have also been rather soft recently, implying the trend of stagnating employment that began at the start of 2019 to continue, noted Nordea Bank. This might be a cause of concern for the Swedish central bank.

The employment rate is high from a historical perspective and therefore a modest deceleration would not be a surprise. Riksbank’s indicator of resource utilization is pointing down since the start of 2019, also implying that the domestic economy is losing steam. Today’s reading points in a different direction.

The central bank upwardly revised its forecast for unemployment in its latest monetary policy report, now expecting a jobless rate of 6.4 percent on average in the second quarter 2019 and a gradual upward movement to land at 6.8 percent in 2022.

“This is mainly due to the already high employment rate and lower growth”, added Nordea Bank.

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