Less Tight Labour Market and 2024 Budget Announcement

Sweden's seasonally adjusted unemployment rate for August saw a 1pp increase to 8.0% (vs 7.2% expected and 7.0% prior).

• The trend unemployment rate (seasonally adjusted and smoothed data) increased to 7.6% (vs 7.5% prior).
• The labour market slowdown was helped by a decrease in the number of temporary employees, as the summer season comes to an end.
• This increase provides the first sign of cooling in a tight Swedish labour market, which has been expected by some analysts. When quarterly vacancy data for Q3 is release, we should see a further tick up in the number of unemployed workers per job vacancy (indicating less tight conditions).

Elsewhere, the Riksdag submitted a SEK39bln budget for 2024, slightly below the SEK40bln promised previously. The restrained budget is aimed to help combat inflation in tandem with the Riskbank. Highlights include:

• A reduced tax on petrol and diesel from next year.
• Reduced tax on pensioners and the introduction of an activity requirement for income support.
• Measures for improved electricity supply including guarantees for new nuclear power.

EURSEK ticked 0.12% lower following the labour market release but has since come off slightly. The data has no bearing on tomorrows Riksbank decision, but further loosening may increase the case for a pause come November.