“The Economic Tendency Indicator dropped almost two points from 93.8 in April to 91.9 in May and indicates that growth in the Swedish economy is much weaker than normal,” the report from NIER (Konjunkturinstitutet) stated.
“The decrease was due primarily to falls in the confidence indicators for manufacturing and consumers…The (manufacturing) industry anticipates further reductions in the workforce.”
The tendency indicator is a method used to measure how people in different segments of the economy feel about the current climate. It is considered similar to the European Commission’s Economic Sentiment Indicator (ESI) and is “based on monthly surveys of households and firms and consequently captures the sentiment among these players in the Swedish economy”.
The index weights the different segments according to their importance to the national economy – industry 40 percent, the service sector at 30 percent, construction and retail both five each, while consumers make up 20 percent of the index rating system.
“The confidence indicator for the manufacturing industry fell six points from April to May and is now ten points below the historic average. New orders have generally been weak, and dissatisfaction with order books is considerably greater than normal,” the institute said in a statement.
While confidence in the construction and engineering fields went up compared to last month, the indicator was “still well below the historic average”.
“New orders, construction output and employment have all declined in recent months. New orders are expected to pick up in the coming months, and output is expected to be largely unchanged. However, construction firms expect employment to continue to fall,” the review stated.
While retail as a whole had dropped two points, there were variations in between sectors. Swedes were still buying enough food to keep grocers performing the best among their peers, while sales of cars provided less strong figures yet its representatives said they were expecting auto sales would pick up..
In the service industry, most sectors expected demand to climb in the new few months, with certain sector hoping to employ more people – primarily restaurants, technical consultants and architects.