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GDP Indicator Positive In November But Consumption Outlook Still Weak


October and November's positive monthly GDP prints suggest upside risks to the Riksbank -0.4% Q/Q forecast for Q4 '23, though analysts have noted that the monthly indicator is not generally a good predictor of the quarterly figure.

  • The November GDP indicator came in above consensus at +0.2% M/M SA (vs -0.6% M/M cons, +1.0% prior). Weak imports of goods were highlighted as a driver for the indicator remaining above zero.
  • Overall, this doesn’t change much for the Riksbank policy outlook. The growth outlook is known to be weak and the bar for additional rate hikes is extremely high. Only a much higher-than-expected CPI print next Monday would call into questions analysts' calls for no further tightening in Sweden.
  • The positive GDP print comes in spite of overall business production falling -0.3% M/M SA and -1.2% Y/Y, and consumption data showing continued signs of weakness.
  • Retail sales, released alongside the monthly GDP data, fell -0.5% M/M SA (vs an upwardly revised +1.7% prior) and -1.7% Y/Y (vs an upwardly revised -0.4% prior), with consumable goods printing weaker than durable goods counterparts. Household consumption fell -0.5% M/M SA (vs an upwardly revised +0.5% prior) and rose +0.1% Y/Y (vs an upwardly revised 0.7% prior). The largest negative contribution to household consumption came from recreation and culture, which fell -3.4% Y/Y, while housing, electricity, gas and heating was the largest upside contributor.
  • The monthly indicators are volatile series, but the 3m/3m retail sales have been negative for the past four months, printing at -0.6% 3m/3m in November (vs -0.7% prior). Trends in household consumption have not been as negative, hovering either side of zero growth, but the weak picture remains clear.

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