Economic Tendency Indicator Sees Broad-Based Improvement In January

The January Economic Tendency Indicator saw improvements in all sub-components, with the headline index rising above 90 for the first time since June 2023 (at 90.5, vs an upwardly revised 84.7 prior).

• SEK has reacted positively following the release, with NOKSEK and EURSEK around -0.3% today. Overall, the inflation implications of the release were mixed. Consumers' 1-year ahead inflation expectations rose to 7.1% Y/Y in January (from 6.5% prior), but business expectations fell to 1.7% Y/Y in Q4 '23 (vs 2.2% in Q3). Across industry overall, expected selling prices remained steady at a high level, though the indicator for services saw a small leg lower.
• However, we note that the Riksbank places more weight on inflation expectations from Prospera's money market participant survey (which saw moderations across time horizons in January), and business pricing plans from the Riksbank's Business Survey (which was heavily relied upon at the November meeting).
• Consumer confidence saw the largest monthly increase in confidence across components in January, rising to 82.3 (vs an upwardly revised 74.8 prior) - the highest since April 2022 and the largest 1-month rise since 1996. Consumer's expectations for interest rates fell over 1/2/5-year horizons.
• All industry sub-components were above 90 in January, with manufacturing the best performing sector at 99.3 (vs 95.1 prior). Employment expectations also improved, driven by services and manufacturing firms, but somewhat offset by retailers.