Confidence Measures in Sweden Hover Near All-Time Highs

Swedish consumers and business leaders are maintaining extraordinary levels of confidence this summer, although the National Institute for Economic Research monthly survey results did ease a bit for August, reported today. The total "economic tendency" measure stands at 112.3, where the long-run average since 1996 equals 100. The August figure is 3.4 points less than July's 115.7. A recent high is 116.9 in April, and the all-time high was 118.2 in March 2000, at the peak of the tech boom.

Both the consumer and the business surveys have shared in the recent strength. Consumer confidence had a positive balance in August of 19.7%. It was 21.3% in July and its recent high was 23% in April. There are two divisions of this index, the "macro" and the "micro". The questions in the macro set include opinions on the overall economy for the coming year and on the unemployment rate. The micro questions ask about the current condition and prospects for personal finances and about whether respondents believe this is a good time to make major purchases and if they plan to increase major purchases in coming months. As we see, people's views of the macro economy swing widely, but they see their personal situation in a pretty steady light. So the currently less buoyant readings on the "micro" indicator don't suggest a weak consumer outlook, but one instead that sees the wider economy as relatively strong.

The industry survey also sees much of the economy doing well. Traditional manufacturing looks at first to be an exception with a mere +5 reading, but the industry detail shows strength in key products Sweden is known for: machinery, electrical equipment and transportation equipment. Other European producers of these items have also seen good demand recently. Swedish retailing and service industries have been steady at a high level. The real standout is construction. Its August reading of 47% ties with June as the all-time high. No individual industry gauge is a record, but all show favorable results simultaneously, producing the strength in the overall indicator: order books are expanding, the volume of construction produced and anticipated is large and the number of employees is increasing at almost the largest number of firms ever.

So participants in the Swedish economy appear optimistic presently. Its stock market reflects this, with stock prices up 30% in the last few weeks from a year ago. This is similar to German stocks, which have gains of 33%. Both stock markets are less ebullient than they were back in July, but given the upheaval in other nations' stock markets, such backtracking is hardly surprising. What is impressive is the sustained and widespread favorable outlook for Sweden.

Data on Sweden are in Haver's NORDIC database. The share prices come from the MSCI databases, which consist of the Morgan Stanley Capital International indexes.