The higher than expected unemployment reading is mainly explained by somewhat weaker employment than forecast. Employment edged down on the month contrary to our call of a small rise. Nevertheless, employment growth has accelerated during the course of 2013 and was 0.44% q/q in Q4 (a full 1.8% annualized). Indicators have improved, suggesting that growth will remain high in the coming months.
Developments have been very much in line with the Riksbank’s view. Unemployment averaged 7.95% for Q4, almost spot on the Riksbank’s forecast at 7.93%. The same goes for employment as well as the labour supply.
Note that Statistics Sweden has had problems with lower response rate in December. As a consequence, employment may have been underestimated according to the bureau.
All in all, the December LFS report was a tad weaker than we had expected but very much in line with the Riksbank’s view. Thus, labour market trends give no reason for the Riksbank to change its monetary policy stance, underlining that the Riksbank will stay on hold for long.
Details, December Labour Force Survey
Unemployment, seasonally adj.: 8.0 % (Nordea 7.9%; consensus 7.9%; prior 8.0 %)
Unemployment: 7.5% (Nordea 7.5%; consensus 7.5%; prior 7.5%)
Employment y/y: 33 k people (Nordea 59k; prior 75k)
Labour force y/y: 31 k people (Nordea 57k; prior 64k
Nordea