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SWEDEN: Further Real Wage Growth Key To Household Consumption Recovery

SWEDEN
CEEMEABulletSwedenGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

The National Mediation Institute (NMO) estimated a 4.1% Y/Y rise in whole-economy nominal wages, implying 2.4% Y/Y real pay growth. The Riksbank expects increased real wage growth and improving sentiment to support household consumption into next year, a dynamic which is key to its forecast for an economic recovery in 2025 and 2026.

  • Nominal wage growth has eased a little since the start of this year, as the industrial union wage benchmark fell to 3.3% Y/Y from May 2024 (vs 4.1% prior).
  • However, the sustained pullback in headline inflation has allowed for positive real wage growth since September 2023.
  • NMO estimated private sector wages at 4.2% in July (vs 4.3% prior), with public sector wages estimated at 3.6% Y/Y (vs 3.5% prior).
  • August retail sales data were also released today, rising 0.4% M/M and July’s reading seeing a 3 tenths upward revision to 0.8%.
  • Although recent momentum in retail sales growth remains subdued (3m/3m SWDA growth was just 0.1% vs 0.0% prior in August), the sharp improvement in retail sentiment suggests stronger outturns are likely in the coming months. 

 

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The National Mediation Institute (NMO) estimated a 4.1% Y/Y rise in whole-economy nominal wages, implying 2.4% Y/Y real pay growth. The Riksbank expects increased real wage growth and improving sentiment to support household consumption into next year, a dynamic which is key to its forecast for an economic recovery in 2025 and 2026.

  • Nominal wage growth has eased a little since the start of this year, as the industrial union wage benchmark fell to 3.3% Y/Y from May 2024 (vs 4.1% prior).
  • However, the sustained pullback in headline inflation has allowed for positive real wage growth since September 2023.
  • NMO estimated private sector wages at 4.2% in July (vs 4.3% prior), with public sector wages estimated at 3.6% Y/Y (vs 3.5% prior).
  • August retail sales data were also released today, rising 0.4% M/M and July’s reading seeing a 3 tenths upward revision to 0.8%.
  • Although recent momentum in retail sales growth remains subdued (3m/3m SWDA growth was just 0.1% vs 0.0% prior in August), the sharp improvement in retail sentiment suggests stronger outturns are likely in the coming months.