Talking Points:
- Sweden’s Economic Tendency Survey increases 2 points
- Consumer Confidence grows by 2.1 points while Manufacturing Confidence falls by 1.3 points
- Bearish Evening Star suggests strong resistance for the EUR/SEK
With zero interest rates extended for the foreseeable future, Sweden’s Economic Tendency Survey increased by two points in December. Standing at an index of 105.8, all business indicators were measured above the historical average while consumer confidence remained just below. However, despite the survey’s increase, the National Institute for Economic Research has assessed the overall rate of growth to be below the normal level based on weak euro demand.
When asked four questions regarding personal finances, durable goods and the Swedish economy now and 12 months out, consumers exhibited a level of confidence consistent with growth at a ‘normal’ rate, sending the index up by 2.1 points. The remaining 4 components of the indicator increased or decreased at a ‘strong’ pace. Building and civil engineering increased 1.7 points while retail trade gained 1.2 points to stand 7.5 points above the historical average. Furthermore, the private sector’s confidence jumped 5.2 points. However, in countering some of these advancements, manufacturing declined 1.3 points based on a pessimistic assessment of current inventories and new orders.
Also varied in response, the expectations surrounding the nation’s price level and the central bank’s corresponding monetary policy. Inflation expectations of survey participants have not changed since November; their interest rate outlooks however have differed. The changes for one, two, and five years out are as follows: +0.01%, +0.03% and -0.01%. Should the situation run opposite of expectations and deteriorate, the NIER sees more responsibility for correction falling on fiscal rather than monetary policy. Such fiscal spending remains an option as government debt is relatively low at 41% of GDP.
EUR/SEK Daily Chart
Chart Created by Walker England Using MarketScope2.0
