The Q2 GDP was revised down, as we saw a risk for. More surprising was the downward revision of Q1. After the weak start of the year, GDP was only 0.1% higher than a year ago in Q2. The surprisingly strong labour market so far this year is even more difficult to understand after the revisions.
Moreover, GDP for 2011 was revised down by a full 0.8% point to 2.9%. This was partly balanced by the upward revision of GDP growth for 2012 by 0.3% point to 1.0%. Thus, the level of GDP is lower than previously known, which should affect the Riksbank’s assessment of resource utilisation. Add to this the weak start on Q3, underlined by business sector production falling by 1.7% y/y in July, and the first rate hike from the Riksbank’s seems more distant.
However, despite the soft patch that we now are seeing, we stick to our forecast of a rate hike in April 2014 for now, although our call on the Riksbank is more uncertain after the revisions.
Details, Q2 GDP:
GDP: -0.2% q/q (Nordea -0.3; consensus -0.1; before revisions -0.1; Q1 +0.3 revised from +0.6)
GDP: 0.1% y/y (Nordea 0.4; consensus 0.6; before revisions 0.6; Q1 1.3 revised from 1.7)
Nordea