Firms more optimistic, but consumers expect tougher times for the Swedish economy

The Economic Tendency Indicator climbed for a fourth successive month from 107.1 in September to 108.3 in October, which points to stronger growth than normal in the Swedish economy. All parts of the business sector made a positive contribution to the increase. The consumer indicator improved only very marginally in October and continues to signal a degree of pessimism among consumers.

The confidence indicator for the manufacturing industry increased from 110.8 in September to 112.0 in October, which points to a much stronger situation than normal. Two of the three components of the indicator contributed to the increase: firms were more positive about both their order books and their production plans for the next three months. Their view of stocks of finished goods deteriorated but remains much more positive than normal.

The confidence indicator for the building and civil engineering industry climbed 1.6 points in October to 112.4, which also suggests a much stronger situation than normal. Both components of the indicator made a positive contribution: firms were more positive about their order books, and their already highly optimistic employment expectations improved further.

The confidence indicator for the retail trade rose from 111.1 in September to 112.1 and so continues to show a much stronger situation than normal. The changes in the net balances for the questions included in the indicator were very limited. Historical sales were almost unchanged from September, with far more companies than normal reporting increased sales. Firms´ assessment of stocks of goods remained positive by historical standards, and expectations for sales in the coming months were as optimistic as before.

The confidence indicator for the private service sector climbed 1.2 points in October to 105.5, which is well above the historical average. Two of the three questions made a positive contribution: firms were more positive about both historical demand over the past three months and future demand in the next three months. They were, however, somewhat less positive about how their operations have developed.

Consumers remain somewhat more pessimistic than normal, with the confidence indicator changing only very marginally from 98.7 in September to 98.8 in October. Four of the five questions made a largely neutral contribution to the indicator: consumers remain negative about the current state of the Swedish economy, their view of their present personal finances and whether now is a good time to make major purchases is as positive as before, and their expectations for their personal finances over the next 12 months remain just below the historical average. On the other hand, expectations for the Swedish economy improved somewhat, which contributed to the change in the indicator, but consumers remain much more pessimistic than normal about the economic outlook.

Indicators

Note. The standardisation of the Economic Tendency Indicator means that it cannot be calculated as a weighted mean of the levels of the sector confidence 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.

Household expectations on inflation and interest rate

Revised method for calculating consumers´ inflation expectations.