The manufacturing production continued to fall in September and came out well below forecasts. Production was down by a full 4.3% over the year. The downturn in September was broad based.
Order intakes fell too and show the same downward trend as production. Other indicators are more positive though and in contrast to the very weak production figures. The outlook is uncertain. Given the global outlook, one should not hope for any marked turn-around in the near term.
The service sector is doing much better. Production was revised upwards for August and production continued to rise in September. The year-on-year figure was as high as 4.3% in September. Indicators are rather upbeat, including the PMI released this morning, and production has gained momentum again after the previous months.
All in all, the production figures are rather mixed and underlines that the economy is divided. The strong upturn in the service sector will probably balance the falling activity in the manufacturing industry. Still, hard data for Q3 have in general been rather weak. This is in line with the Riksbank’s view of a GDP growth by a mere 0.2% q/q in Q3.
As we have pointed out many times before, the production figures are poor indicators for GDP growth. Moreover, we still lack information (inventories etc.) ahead of Q3 GDP due 28 November.
Details, September
Manufacturing
Production y/y: -4.3% (Nordea & consensus -2.0%; prior unrevised at -2.4% )
Production m/m: -1.1% (Nordea 0.0; consensus +0.3%; prior 0.3% revised from -0.2%)
Order intake y/y: -2.1% (prior -5.1%, revised from-4.7 %)
Order intake m/m: -1.0% (prior 1.1%, revised from 0.6%)
Private services sector
Production y/y: 4.3% (Nordea 2.8%; prior 2.9%, revised from 2.3%)
Production m/m: 0.8% (Nordea 0.3%; prior 0.9%, revised from 0.7%)
PMI, services: 57.7 (Nordea 55; prior 55.6)
Nordea