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Stagflationary Signals From Services PMI

SWEDEN
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The Swedish February services PMI fell to 50.5 (vs a downwardly revised 51.5 prior). Details suggest a stagflationary report, but the inflation signals are in contrast to recent survey and inflation data.

  • The survey continues to indicate a relatively more optimistic picture that the Economic Tendency Indicator (ETI), though we note that this has been the case for much of the last decade.
  • Supplier input prices rose to 62.4 (vs 56.4 prior, the highest since August 2023). This comes in contrast to the recent deceleration in January services CPI (to 4.9% vs 6.4% prior) and the services business pricing plans indicator in the February ETI (to 13 from 23, versus a historical average of 11).
  • Employment fell to the lowest level since October 2020 (to 46.1 vs 50.3 prior), consistent with the recent drift upwards in the unemployment rate.
  • One bright spot in the survey is future business volume, which rose to 62.0 (vs 55.5 prior).

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The Swedish February services PMI fell to 50.5 (vs a downwardly revised 51.5 prior). Details suggest a stagflationary report, but the inflation signals are in contrast to recent survey and inflation data.

  • The survey continues to indicate a relatively more optimistic picture that the Economic Tendency Indicator (ETI), though we note that this has been the case for much of the last decade.
  • Supplier input prices rose to 62.4 (vs 56.4 prior, the highest since August 2023). This comes in contrast to the recent deceleration in January services CPI (to 4.9% vs 6.4% prior) and the services business pricing plans indicator in the February ETI (to 13 from 23, versus a historical average of 11).
  • Employment fell to the lowest level since October 2020 (to 46.1 vs 50.3 prior), consistent with the recent drift upwards in the unemployment rate.
  • One bright spot in the survey is future business volume, which rose to 62.0 (vs 55.5 prior).