Consumers in Sweden and Norway are helping the Nordic region’s two largest economies weather the euro-area recession by giving retail sales a boost in May.
Swedish sales rose 0.8 percent in the month, more than double the 0.3 percent estimated by five economists in a Bloomberg survey. Norway’s retail sales, excluding motor vehicles, increased 1.8 percent in May from the prior month. That’s more than the 0.5 percent median estimate of seven economists surveyed by Bloomberg.
Swedish retail sales “are on an upward trend and we expect this trend to continue,” Torbjoern Isaksson, chief analyst at Nordea Bank AB, said in an e-mailed note to clients. “Household strength will become a still more dominant theme later this year,” which will keep “the Riksbank from resorting to rate-cutting measures” going forward.
Sweden’s central bank in April kept its main lending rate unchanged at 1 percent, citing signs the economy is recovering on the back of bright spots in the U.S. and Asia. The Riksbank ended a yearlong spate of rate cuts last December that had been intended to boost economic growth amid weak demand for Swedish exports from the shrinking euro area.
Its Norwegian counterpart, Norges Bank, has kept the key rate at 1.5 percent for more than a year and last week signaled an increased chance of a rate cut in September. That sent the krone down 3.3 percent against the euro, easing conditions for Norwegian exporters.
Norway’s economy is “not that weak after all,” Katrine Boye, a senior economist at Nordea Bank AB, said in an e-mailed note to clients. “We had expected solid growth but the figures were even stronger and the development so far in the second quarter is now quite decent.”
The Norwegian krone strengthened as much as 0.4 percent to 7.8493 against the euro in Oslo, while the Swedish krona rose as much as 0.5 percent to 8.7364. Both currencies erased the gains by 12:38 p.m.
Jobless rates have eased in both countries. Sweden’s seasonally adjusted unemployment rate unexpectedly fell to 7.9 percent last month, while Norway’s registered jobless rate held at 2.5 percent in June, the Labor and Welfare Service said today. Unemployment in Norway had reached 2.7 percent in January.
“Seen together with this week’s lower than expected survey unemployment figures we could conclude that the labor market, if anything, seems tighter than expected by Norges Bank,” Boye wrote.