Swedish consumer confidence improved for a third month in May after the central bank cut interest rates twice since December to avoid a recession in the largest Nordic economy.
The consumer confidence index rose to 5.9, the highest since July, from 4.7 in April, the Stockholm-based National Institute of Economic Research said today. Economists predicted a reading of 2.5, according to the median forecasts in a Bloomberg survey. A manufacturing confidence index rose to zero from minus 1.
“Growth in the Swedish economy is more or less normal,” NIER said in a statement. “Consumer confidence in the economy is slightly more positive than normal,” while “industrial firms remain optimistic and forecast an increase in output for the next few months.”
Sweden’s $500 billion economy will probably accelerate amid rising confidence, the country’s central bank Governor Stefan Ingves said in the minutes of the bank’s latest rate meeting last month. The Riksbank kept its benchmark interest rate at 1.5 percent on signs a pickup in economic growth and predicted no more cuts in the next year after two reductions since December.
Sweden’s krona rose 0.1 percent to 8.9729 per euro as of 11:02 a.m. in Stockholm. The benchmark two-year yield climbed 2 basis points to 0.81 percent.
“It’s indeed positive that consumers continue to turn cheerier despite the renewed debt-related concerns and the more sour stock market climate,” Anna Raman, a senior analyst at Nykredit Bank A/S in Copenhagen, said in a client note. “These numbers make us feel more comfortable with our view that GDP growth will be positive in quarter-on-quarter terms in Q2.”
Sweden will publish gross domestic product data for the first quarter tomorrow. The Nordic economy will grow an annual 0.9 percent in the three months through March, according to a Bloomberg survey of 14 analysts. The economy shrank 1.1 percent in the last three months of 2011.
A separate report today showed Swedish household borrowing growth slowed to 4.8 percent in April, the lowest in at least 10 years, from 5 percent in March.
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