• Strong momentum also in Q2
• Higher confidence in all sectors apart from retail
• Companies plan to increase employment
Q2 should also see strong momentum
Overall confidence increased substantially in May to 110 (105.8) a level that indicates that activity is clearly above normal in the Swedish economy. At this level, the barometer suggests that the momentum in GDP growth could be just as strong in Q2 as in Q1 (1.4 percent q-o-q).
Higher confidence in all sectors except retail
Confidence increased within all business sectors except retail. The decline in retail confidence is from a very high level, however, and all retail sectors expect strong sales ahead. The manufacturing industry reports increased production, and forward looking indicators such as orders and production plans are elevated. Also, it is positive to see that confidence within the construction sector, which has been depressed for a long time, now is substantially above its historical average. Builders now expect increased production ahead.
Companies expecting to increase payrolls
All business sectors now expect to increase payrolls ahead, supporting our view of a stronger labour market. This is also key to the recovery gaining a firmer hold of the economy. Consumer confidence decreased slightly from a very high level. However, this was due to a slightly more negative view on the Swedish economy, while households grew more positive regarding their own economies (micro index). Historically, households judgements on their own economy has been a better indicator of economic activity. Also, households are growing more and more positive regarding the labour market outlook, something they historically have been rather good at judging.
Strong growth also in Q2 according to barometer
Source: Handelsbanken Capital Markets