Sweden’s Unemployment Just Reached its Lowest Level in 10 Years
- The Swedish housing market has slumped during the last six months, creating fears of spill-over effects to other parts of the economy…
- …but new figures show that the unemployment plummeted to a new 10-year low of 5,9 percent in February, easing fears about the domestic economy losing steam.
A combination of a large supply of new built housing hitting the market and stricter amortisation rules has pulled down the Swedish housing market during the last six months. The fall in prices has been most dramatic in major cities like Stockholm where the prices in February 2018 were down 12% from the peak in August 2017. This has created worries about spill-over effects to other parts of the economy, especially consumption – and in turn the labor market.
However, new unemployment figures from the Swedish Statistics Bureau – published last week – speak for the contrary. Unemployment dropped to 5.9 percent in February –well below economists’ forecasts. In fact, the February figure was the lowest reading since August 2008.
Strategists at Nordea Bank were impressed by the employment report, saying it will probably ease some worries in the marketplace.
“All in all, it’s a strong report. The uptick in employment came after several months with weak readings, and the upsurge will reduce fears of the domestic economy losing steam.”
Wage inflation, a continued headache for the Swedish central bank Riksbanken, could benefit from the current strong labor market as well, according to Nordea.
“This will also give the Riksbank some hope of wages picking up. However, so far wage increases have been surprisingly modest and labour market parties’ expectations on wages remains contained”.
