Sweden’s Industrial production putting on the breaks?


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Wednesday, 01 June 2011
It looks like the Swedish industrial production is slowing down if one was to take the figure from the purchaser’s managers index (PMI) close to heart. The index’s latest release show a fall in May to its lowest level since autumn 2009. The largest contribution to the decline came from new orders.

The Swedish Purchasing managers' index fell in May to 56.1 from 59.8 in April. It was expected a decline instead to 58.9.

"The downward shift we have seen strengthened during the month of May, "said Jorgen Kennemar, analyst at Swedbank, which together with the trade organization Silf published the index.

The decline is the biggest in years but the index is still above 50, indicating that there is growth but not to the level that has been enjoyed in the past months. "I note that we are still in the growth zone, "said Jorgen Kennemar.

All sub-indices fell. The greatest contribution to the overall decline came from the sub-index of new orders which fell 6.1 index points to 55.4. It can be seen as a sign that the weaker signals on the global economy that occurred during the spring has started to be marked in the corporate order books.

Although there is the call for cautious reading and non exaggeration of the numbers, there is a general consensus that there is a slowdown in the Swedish industrial production.

He points out that sub-index of firms' production plans, another forward-looking indicator, despite a decline are still at very high levels around the 70. "It suggests that companies are still optimistic, "said Jorgen Kennemar.

In other markets the purchasing manager index weakened in recent months. The index for China, which was published on Wednesday, fell in May to 52 from 52.9.
The "declines we've seen suggest that global growth is about to enter a quieter phase, "said Jorgen Kennemar.
By Team

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