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SWEDEN: Activity Data Supports Riksbank Base Case of 25bp Cut Pace

SWEDEN
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Swedish GDP rose 0.5% on a 3m/3m basis in September, according to the monthly indicator. At face value, this could indicate upside risks to the Riksbank 0.2% Q/Q forecast for Q3 GDP from the September MPR, thus decrease the probability of a 50bp cut at the November 7 meeting.

  • Riksbank Governor Thedeen has noted this morning that the household consumption and flash inflation (released earlier this week) data were in line with the central bank's forecasts. This suggests that the base case of 25bp cuts in November and December still holds.
  • The Q3 GDP indicator is due on October 29, but as with the monthly indicator, it is not a very good predictor of actual GDP outcomes.
  • As such, we wouldn’t expect the Executive Board to put too much weight on that reading at the November meeting. Forward looking indicators like the Economic Tendency Indicator, alongside monthly labour market data, might be a more important gauge of activity.
  • The consumption indicator rose 0.8% M/M in September, after 1.2% in August. The 3m/3m growth was still negative at -0.1% though. The Riksbank projected Q3 consumption growth at 0.2% Q/Q in the September MPR.
  • Private sector production and industrial orders also rebounded on a monthly basis to 1.6% M/M (vs -0.9% prior) and 5.1% (vs -3.4% prior) respectively.

 

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Swedish GDP rose 0.5% on a 3m/3m basis in September, according to the monthly indicator. At face value, this could indicate upside risks to the Riksbank 0.2% Q/Q forecast for Q3 GDP from the September MPR, thus decrease the probability of a 50bp cut at the November 7 meeting.

  • Riksbank Governor Thedeen has noted this morning that the household consumption and flash inflation (released earlier this week) data were in line with the central bank's forecasts. This suggests that the base case of 25bp cuts in November and December still holds.
  • The Q3 GDP indicator is due on October 29, but as with the monthly indicator, it is not a very good predictor of actual GDP outcomes.
  • As such, we wouldn’t expect the Executive Board to put too much weight on that reading at the November meeting. Forward looking indicators like the Economic Tendency Indicator, alongside monthly labour market data, might be a more important gauge of activity.
  • The consumption indicator rose 0.8% M/M in September, after 1.2% in August. The 3m/3m growth was still negative at -0.1% though. The Riksbank projected Q3 consumption growth at 0.2% Q/Q in the September MPR.
  • Private sector production and industrial orders also rebounded on a monthly basis to 1.6% M/M (vs -0.9% prior) and 5.1% (vs -3.4% prior) respectively.