Consumers pessimistic about the Swedish economy

The Economic Tendency Indicator, which summarises how firms and consumers view the economy, fell 2.2 points from 101.4 in March to 99.2 in April. The construction, retail and service indicators all rose, while the manufacturing indicator plunged 6.9 points and the consumer indicator also fell.

The construction and retail indicators now point to a much stronger situation than normal, while the consumer and manufacturing indicators are below the historical average, and the situation in the service sector is only slightly stronger than normal.

Situation stronger than normal

The confidence indicator for the manufacturing industry fell no fewer than 6.9 points in April to 6.3 points below the historical average. After this third successive month of decline, the indicator now points to a weaker situation than normal. All three questions contributed to the decrease: firms were more negative about both current order books and current stocks of finished goods, and expectations for production volumes were revised down. The weakest situation was reported by the durable goods sector, while the situation in the non-durable goods sector is still stronger than normal.

The confidence indicator for the building and civil engineering industry climbed 4.9 points in April from 105.8 to 110.7, which is well above the historical average, indicating a much stronger situation than normal. One of the two questions contributed to the increase: the assessment of current order books was more positive than in March, while the sector’s expansive employment plans for the next three months were unchanged.

The confidence indicator for the retail trade climbed from 107.5 in March to 111.6 in April, a level that indicates a much stronger situation than normal. All of the questions included in the indicator contributed to the increase: historical sales volumes were reported to have grown more quickly than in March, the assessment of stocks of goods was less negative, and expectations for sales volumes over the next three months were more optimistic.

The confidence indicator for the private service sector rose 2.7 points from March to April and is now 4.4 points above the historical average, pointing to a stronger situation than normal. Two of the three questions contributed positively to the rise: firms were more positive about how their operations have developed in recent months, and historical demand was reported to have increased more quickly, while expectations for demand in the next three months were largely unchanged from March and made a neutral contribution.

Consumers more downbeat about the Swedish economy

The Consumer Confidence Indicator fell back below the historical average in April after climbing in March. Four of the five questions contributed to the decrease, with those about the Swedish economy having the greatest impact. Consumers are now much more negative about the economy both now and over the next 12 months, and somewhat less positive about the current state of their personal finances and whether now is a good time to make major purchases. Expectations for their personal finances over the next 12 months were unchanged from March and made a neutral contribution.

Indicators

The situation is: ++ very strong, + strong, = normal, - weak, -- very weak.

The confidence indicator for the total industry is obtained by weighting the confidence indicators for building and civil engineering, manufacturing, the retail trade and the private service sector on the basis of the number of employees in the population. These weights are different to those used in the calculation of the Economic Tendency Indicator.

The confidence indicator for the private service sector has been estimated for January 1996 to November 2001 on the basis of quarterly series for a limited number of service industries.