Jan. 24 (Bloomberg) -- Sweden’s unemployment rate unexpectedly fell in December as domestic demand supported the labor market amid job cuts by exporters in the Nordic region’s largest economy.
Seasonally adjusted unemployment fell to 7.8 percent from 8.1 percent the previous month, the Stockholm-based statistics office said today. Economists surveyed by Bloomberg expected an unchanged rate, according to the median of eight estimates. The non-seasonally adjusted rate fell to 7.4 percent from 7.5 percent.
Domestic demand still supports the Swedish economy, with gross domestic product expanding 1.4 percent this year, after growing 0.8 percent in 2012, Morgan Stanley economists Elga Bartsch and Tomasz Pietrzak said in a note yesterday.
“Lower inflation pressures, faster wage growth and falling interest rates should boost household finances and encourage consumption, which we expect to accelerate to 1.7 percent,” they said.
Even so, Sweden’s export-led economy is hurting as demand from the recession-hit euro area declines. Ericsson AB, the world’s largest maker of mobile phone networks, and truck maker Volvo AB, are among exporters planning job cuts in Sweden. The country sells about half of its output abroad, of which about 70 percent go to Europe.
Sweden’s central bank last month predicted no more interest rate cuts after reducing its repo rate four times since December 2011 to 1 percent. The government last month said the Swedish economy will recover to 1.1 percent this year from 0.9 percent in 2012.
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