Swedish consumer confidence improved for a second month in February as stock markets rose and the labor market showed signs of stabilizing, damping speculation of more interest rate reductions.
The consumer confidence index rose to minus 1 from minus 2.9 the previous month, the Stockholm-based National Institute of Economic Research said today. That was in line with a median estimate in a survey of eight economists. A manufacturing confidence index rose to minus 11 from a revised minus 17, beating the minus 15 estimate.
There are “rays of light in the Swedish economy” even as growth “is still weaker than normal,” NIER said in a statement. “Manufacturing confidence and the private service sector made a positive contribution” to the economic tendency indicator which rose to 94.7 in February from 89.9, “while the results from the construction industry and the retail trade were neutral,” the group said.
Most forecasters estimate the economy will revive this year amid confidence that Europe has surfaced from the worst of its fiscal turmoil. Sweden’s central bank last week left its main rate unchanged at 1 percent, following four reductions in a year to support the export-dependent economy. The Riksbank’s next rate decision is on April 16.
“Our call for an April rate cut has become a bit more uncertain,” said Olle Holmgren, an analyst at SEB AB in Stockholm, in a client note. “The better sentiment will make the Riksbank confident that its forecast of better growth in 2013 is on track.”
Sweden’s krona strengthened 0.1 percent to 8.4566 per euro as of 10:50 a.m. in Stockholm. Two-year government note yields rose two basis points to 1.10 percent.
Sweden’s central bank last week predicted economic growth in the Nordic country will pick up to 1.2 percent this year and 2.7 percent in 2014, from 0.9 percent last year. Sweden’s OMX30 stock index has risen 8.3 percent this year.
“The survey showed a broad based improvement from low levels,” Mats Hyden, an analyst at Nordea Bank AB, said in a client note. “Order flows from the export market have stopped falling, and the view of order books look somewhat less negative,” while “in the household sector, a less negative view of the Swedish economy contributed positively.”
Seasonally adjusted unemployment held at 8 percent last month, as the pace of job cuts subsided. Still, a report yesterday on the euro area’s services and manufacturing industries indicated Europe’s economy remained in recession at the start of the year.
“The unexpected decline in euro-zone PMI yesterday is a reminder that the headwinds from international growth are likely to continue,” Holmgren said. “Still, growth is likely to continue to be weaker than the trend which means that unemployment is likely to rise.”
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