Swedish unemployment unexpectedly rose in May as the euro-area debt crisis hurt demand for exports from the largest Nordic economy.
The non-seasonally adjusted jobless rate climbed to 8.1 percent from 7.8 percent in April, the Stockholm-based statistics office said today. It was forecast to be unchanged, according to the median of 13 estimates in a Bloomberg survey.
Europe’s deepening crisis has sapped economic growth and dented demand for exports, which account for about half of Sweden’s economic output. Manufacturing contracted last month for the first time this year, a survey by Swedbank AB indicated. Industrial production slumped for a third month in April.
“We expect the softening trend that started about a year ago to continue in the coming quarters, with the labor market reacting with a delay on the sharp downturn in growth in the second half of 2011,” Anna Raman, a senior analyst at Nykredit Bank A/S, said in a note to clients.
Sweden’s central bank has cut its main interest rate twice since December after the economy contracted for the first time since 2009 in the fourth quarter. The bank kept the rate unchanged in April after predicting growth will slow to 0.4 percent this year from 3.9 percent in 2011. It will hold its next rate meeting on July 3.
We “maintain our view that the repo rate has bottomed out even though risks mainly are on the downside due to the uncertain euro-area situation,” Raman said. “As inflation remains low and as uncertainty resulting from the euro-area debt crisis may linger, we believe that interest rates will be kept at 1.5 percent into 2013 at least.”
Swedish consumer prices dropped 0.1 percent in May from the previous month, while annual inflation stayed below the central bank’s 2 percent target, at 1 percent.