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SWEDEN: September LFS Data Probably Still Supports a 25bp Riksbank Cut In Nov

SWEDEN
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The labour market evolved broadly in line with the Riksbank’s September MPR forecasts in Q3, according to labour force survey (LFS) data. The unemployment rate averaged 8.50% (in line with Riksbank projections) while the employment rate averaged 68.9% (vs 69.0% projected). Taken alongside the September inflation and August activity data, we think the balance of risks still tilts towards a 25bp cut in November.

  • However, the door remains open to a larger 50bp cut, as indicated by Governor Thedeen at this week’s Parliamentary hearing. Weak labour market statistics from the Public Employment Service (PES) and the ECB’s 25bp October cut (which wasn’t expected at the September Riksbank meeting) could support a more aggressive easing pace than 25bps.
  • In September, the unemployment rate was 8.6% (vs 8.4% cons, 8.3% prior). However, this rise was due to an increase in the total labour force, with employed persons little changed relative to August. 
  • The LFS unemployment rate Sahm rule was 0.53, it’s lowest reading since June 2023. We highlighted the diverging momentum between the LFS and PES unemployment measures earlier this week.
  • On a 3m/3m basis, employment growth was -0.3%, underscoring that the overall picture remains weak.
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The labour market evolved broadly in line with the Riksbank’s September MPR forecasts in Q3, according to labour force survey (LFS) data. The unemployment rate averaged 8.50% (in line with Riksbank projections) while the employment rate averaged 68.9% (vs 69.0% projected). Taken alongside the September inflation and August activity data, we think the balance of risks still tilts towards a 25bp cut in November.

  • However, the door remains open to a larger 50bp cut, as indicated by Governor Thedeen at this week’s Parliamentary hearing. Weak labour market statistics from the Public Employment Service (PES) and the ECB’s 25bp October cut (which wasn’t expected at the September Riksbank meeting) could support a more aggressive easing pace than 25bps.
  • In September, the unemployment rate was 8.6% (vs 8.4% cons, 8.3% prior). However, this rise was due to an increase in the total labour force, with employed persons little changed relative to August. 
  • The LFS unemployment rate Sahm rule was 0.53, it’s lowest reading since June 2023. We highlighted the diverging momentum between the LFS and PES unemployment measures earlier this week.
  • On a 3m/3m basis, employment growth was -0.3%, underscoring that the overall picture remains weak.