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Political Economy

Considerable fall in Swedish industrial production

Friday, 09 November 2012
Swedish Industrial production decreased by 4.1 percent in September compared to August in seasonally adjusted figures. Comparing September with the same month in 2011, industrial production decreased by 5.0 percent in working day adjusted figures.
Industrial production turned sharply downward in September, official data from statistic Sweden show.

The decline was much larger than expected. Analysts had expected a decline of 0.7 per cent compared to August and 0.1 percent compared with September 2011, according to a Reuters analysis.

The decline is the largest since January 2009, apart from a temporary reduction in production in February earlier this year. The majority of the industry sub-sectors showed a negative development in September. When comparing the third and second quarter production was unchanged.

According to a comment from Nordea economist Andreas Jonsson, speaking to Swedish news agency, TT, the gloomy figures make it clear that the Swedish economy could start to downsize in the third quarter of this year.

On a yearly basis industrial production decreased by 5.0 percent in September compared with the same month in 2011. The negative development is explained by broad declines across the whole industry. The motor vehicle industry and the industry for basic metals showed the weakest development.

Nordea's economists expect, as most observers had identified, that the Riksbank could cut the repo rates by December.
"But today's figures increase the likelihood of further interest rate cuts early next year," writes Jonsson, according to TT.

The weak numbers are blamed on the tough year in the global economy and analysts are rather surprised that it took so long before it showed up this clearly.
by scancomark.com

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