MNI INTERVIEW (RPT): Swedish Data May Reflect Worker Shortages

(Repeats article first published on June 30)

Robust corporate hiring plans reported together with plunging consumer confidence in the latest survey by Sweden’s National Institute of Economic Research may partly reflect problems in filling vacancies, though the discrepancy between the two measures may eventually narrow if unemployment remains contained, NIER division head Fredrik Johansson-Tormod told MNI.

A mix of factors, including the war in Ukraine and high inflation, appear to be driving down consumer sentiment even as firms try to respond to a brighter outlook as the Covid pandemic eases, clouding the picture for policymakers, Johansson-Tormod said in an interview ahead of the Riksbank’s policy decision due on Thursday.

“Companies are trying to (respond to) the sudden increase in demand. Then you have the war and the inflation situation, a lot of things that are happening at the same time. To figure out which one has the biggest impact, it is not easy,” he said.

SKILL SHORTAGES

In Sweden, as elsewhere, skill shortages may be showing up as firms seek to meet the surge in demand as the pandemic wanes.

“If it is not possible to hire people of course they are more likely to answer the next month that they want to hire people again. That is a problem. Having said that, the (hiring intention) numbers are still really, really, high. Companies in Sweden wish to hire to a very high degree that we haven’t seen before,” Johansson-Tormod said.

If there are more persistent, unfilled vacancies “That would indicate that the matching between unemployed and vacancies has been less optimal. Has it changed? … I don’t know, but that is one possible explanation, that the matching is not as good as it was previously.”

DATA DIVERGENCE

The NIER’s Economic Tendency Indicator fell to 105.9 in June from 110.3 in May, while the consumer confidence measure dropped to 65.5 from 71.3, though Johansson-Tormod stressed that the survey data should be treated with caution.

Consumers “are more gloomy today than they were during the pandemic,” with the better off more worried than others, he said.

“We know that people who are … higher in the income distribution are less happy than the rest of them. People with higher incomes … are more worried about the economy within the next 12 months.”

The gap between firms’ upbeat hiring expectations and consumer gloom may eventually start to narrow, he added.

“As long as people don’t get unemployed, I suppose that this (consumer sentiment) figure will rise again. The biggest problem has to be if people get unemployed. That we haven’t seen yet,” he said.