"The temperature in the industry cooled down in December but continues to be in an expansive phase. Sweden stands out compared to the euro countries, even though the decline in export orders shows that the Swedish industry is not immune to what is happening in the world around us," says Jörgen Kennemar, responsible for the analysis of the purchasing managers' index at Swedbank, in a press release.
"Holding up fairly well"
The manufacturing industry's purchasing managers' index fell to 52.4 in December. This can be compared to the revised 53.7 in November. An index value above 50 indicates increased activity in the sector, and December was the fifth consecutive month with an industry index above 50.
Analysts had expected a certain slowdown, but not as large. The average forecast among analysts was 53.5 in December, according to a compilation made by Bloomberg.
The big picture is still that the Swedish industry, considering how it looks in Germany and Europe, is holding up fairly well, says Olle Holmgren, chief analyst at SEB.
According to Holmgren, the Swedish industry is expected to continue growing this year, as European industry – the major export market for Swedish companies – appears to be recovering.
"There are good signs"
However, the decisive factor for how the Swedish economy goes is how households make with their consumption, according to Holmgren, who expects a growth of 2.2 percent this year – up from last year's approximately 0.5 percent.
There are good signs, but so far the actual data has been weak, he says.
Like most analysts, he expects the tax cuts at the turn of the year and the delayed effects of the Swedish Central Bank's five interest rate cuts last year to have an impact.
And inflation is low. Energy prices are a bit volatile, but they are not really that high if you look at what the electricity market is pricing in. There are good conditions for households to start consuming more.
