Economic Tendency Survey: Industry and the service sector made a negative contribution in January
The Economic Tendency Indicator fell by a further 1.5 points in January this year and has now declined by a total of almost 24 points since its peak in February 2011. It is well below the historical average and indicates that growth in the Swedish economy is at present significantly weaker than normal. In the total business sector, this month it is the manufacturing sector and the private service sector that make a negative contribution to the Economic Tendency Indicator. The indicators for the construction industry and retail trade both made a positive contribution. The confidence indicator for households also rose in January this year.
The confidence indicator for the total business sector has fallen for eleven consecutive months
The confidence indicator for the manufacturing industry fell by three points in January this year and is well below the historical average. New orders from both the domestic and export markets have fallen in the fourth quarter. Output and employment have declined and capacity utilisation is just under one point lower now than in October 2011. Despite the weak outcome, industrial firms are relatively optimistic ahead of the first quarter of this year and new orders from both the domestic and export markets are expected to rise. Output is expected to remain unchanged, whereas employment is expected to decline further.
The confidence indicator for the construction industry rose by five points in January and new orders and construction output and employment have risen slightly during the fourth quarter. The indicator is well above the historical average. The trend has been weakest for companies focusing mainly on house building and this industry also reports increasing problems with financing business activities. Overall, construction companies forecast unchanged output, with continued price reductions in the first quarter of the year. At the same time, there are considerable differences between areas of activity. The construction industry is optimistic and forecasts an increase in activity, whereas the house builders expect a further weakening of the market.
The confidence indicator for retail trade rose by one point in January but is still well below the historical average. Retail sales have fallen over the past few months. The trend has definitely been weakest in the specialist retail trade, whereas the motor vehicle trade reports largely unchanged volumes. Sales in the food trade, however, have risen further and the sector expects continued satisfactory growth in the first quarter of the year.
The confidence indicator for the private service sector fell by a further four points in January and is now well below the historical average. Demand in the private service sector was largely unchanged in the fourth quarter, but there are still considerable differences between the various service sectors. The trend has been best for hotels and restaurants, leasing firms and parts of the consultancy sector. Employment also appears to have risen slightly in overall terms during the fourth quarter. Service companies expect that both demand and employment will rise slightly in the first quarter of the year.
Households are less pessimistic
The Consumer Confidence Indicator (CCI) rose by just over six points in January, but the indicator is still below the historical average. The Macro Index, which measures consumer confidence in the Swedish economy, rose by just over seven points in January, though households are still more pessimistic than usual about the Swedish economy. The Micro Index, which reflects confidence in personal finances, rose by almost six points in January and is therefore at the same level as the historical average.
For more information:
Roger Knudsen, Head of Economic Tendency Survey, +46-8 453 59 06, +46-70-491 36 04
Maria Billstam, Economic Tendency Survey, +46-8 453 59 04
Sarah Hegardt Grant, Head of Communications, +46-8 453 59 11, +46-70-267 80 41