Unemployment Down

Unemployment in Sweden dipped in October. Figures show that the numbers out of work and claiming benefit was down to 4.6 percent from 4.9 percent in September.

The SCB said total employment, which does not include government job schemes, was 4.384 million people in October versus 4.345 million in the previous month.

”This is a signal to the Riksbank that the job market is strong and an easily understandable reason for why they should continue to raise rates,” said Annika Winsth, analyst at Nordea.

”We believe the bank will hike at all its meetings until spring. These figures strengthen that scenario.” 

Sweden’s economy has been boosted over the last two years by growing exports and by rising domestic consumption.

Gross domestic product grew by 5.1 percent in the second quarter and analysts expect growth to have remained strong in the July-September period.

Job growth has lagged economic growth, mainly due to productivity gains, but there are signs now that companies are taking on more workers.

The SCB said earlier in the week that during the third quarter, the number of Swedes in work rose 2.3 percent year-on-year, with jobs in the private sector expanding at their fastest clip in five years.

Signs the job market is getting tighter will help the central bank justify its rate hikes even though inflation remains tame – at 1.3 percent year-on-year in October – compared with the Riksbank’s target of 2 percent over a two-year horizon.

”The next few months’ rate hikes are all the more certain with this rise in employment,” said Eva Christina Horwitz, analyst at Handelsbanken Capital Markets.

The Riksbank has raised rates five times this year so far to 2.75 percent. Analysts see it hiking further by 25 basis points at its next meeting in December with the key repo rate at  .75 percent a year from now.

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