The Swedish PMI came in much stronger than expected and picked up to 56.0 in September from 52.2 in July. Particularly encouraging was that export orders surged to 57.2 which is the highest level since April 2011 and historically has been consistent with export volumes growing 7% y/y. Exports have been surprisingly weak in Sweden so far 2013 and is still falling y/y, so this could be an important sign that the negative trend finally is reversing. Also, the sub-index for employment flew way above the 50-mark for the first time since 2011.
All in all, the PMI report suggests that the manufacturing sector is suddenly signaling a marked recovery and it has already been above the 50-mark for 5 consecutive months. The classic “orders minus inventories” indicator points to PMI possibly reaching as high as around 60 by the end of 2013. Therefore we expect industrial production to start improving more clearly during the autumn.
EURSEK went from 8.68 to 8.63 after the number. We stick to our EURSEK forecast of 8.20 by mid-2014.
Details, September:
PMI: 56.0 (consensus 52.3, prior 52.2)
Order intake: 59.9 (prior 54.5)
Production: 57.6 (prior 53.9)
Employment: 51.8 (prior 48.2)
Inventories: 46.3 (prior 49.9)
Production plans 6 months ahead: 60.8 (prior 58.5)
Nordea