Consumers see the good times ending

Years of conspicuous consumption in Sweden could soon be coming to an end, with Swedes' feeling more pessimistic about their own finances and the national economy.

A monthly survey by the National Institute of Economic Research shows that Swedish consumers’ planned purchases were worth less in November than in any other month so far this year.

But the Swedish Research Institute of Trade (HUI) said that low interest rates have boosted retail sales to record levels, estimating that the value of Swedes’ Christmas shopping would rise by 7.6 percent to 51.9 billion kronor.

“It has been an incredibly strong year for retail, and we have so far seen no effect of increasing pessimism in the shops,” said HUI analyst Jonas Arnberg.

“It is possible that our optimistic prognosis for Christmas trading could be threatened. We have been waiting for demand in retailing to level off as interest rates rise. This is particularly true for 2007,” he added.

Sweden’s growth is still healthy, although the rate of growth in industry seems to be slowing. While industrial firms are still optimistic, they are not planning large-scale recruitment.

The building industry remains red-hot, with orders and employment rates still rising. Growth rates in this sector are also expected to fall in 2007, however.

Demand in retail remains high, and has increased strongly in the past few months. This has led to increased employment in the sector, particularly within companies selling luxury goods.

The service sector has also seen strongly increased demand in the past few months, meaning that employment rates are up, with one in three companies planning to recruit. This is particularly true for the transport, hospitality, IT consulting and property management industries.

Service sector companies in general expect continued high demand over the coming months.