Sweden: Unemployment above the Riksbank’s forecast

The Labour Force Survey was weaker than expected. Unemployment rose to 8.2% in April from 8.1% in March, 0.2% point above consensus and 0.3% above our call. Employment was flat on the month and somewhat weaker than we had expected, while the labour supply continued to surprise on the upside.

Despite the somewhat weak April reading, employment remains on an upward trend. Thus, the trend with rising employment, strong inflow of labour and high unemployment continues.

The upturn in LFS unemployment is in contrast to registered unemployment according SPES (Arbetsförmedlingen), which has declined for more than 6 months. LFS unemployment should turn down in the coming months, not least as indicators point to solid growth in employment. An encouraging sign is the upward trend in temporary employment, indicating further rise in total employment.

The Riksbank sees unemployment at 8.0% on average for Q2. Thus, unemployment is above the Riksbank’s forecast, supporting the view of a rate cut in July.

Details, April Labour Force Survey
Unemployment, seasonally adj.: 8.2% (Nordea 7.9; consensus 8.0%; prior 8.1%)
Unemployment: 8.7% (Nordea 8.4%; consensus 8.5%; prior 8.6%)
Employment y/y: 56k people (Nordea 60k; prior 58k)
Labour force y/y: 56k people (Nordea 45k; prior 51k)