April 10, 2012 / 9:20 AM / 6 years ago

REFILE-UPDATE 1-Swedish industry output posts worst fall in 2 years

* Swedish Feb industrial production -7.1 pct yr/yr

* Biggest fall in production since Nov 2009

* Industry orders tumble 8.3 pct in Feb

* Raises uncertainty on rates ahead of Riksbank April meeting

By Niklas Pollard and Johan Sennero

STOCKHOLM, April 10 (Reuters) - Swedish industrial production suffered its sharpest fall since 2009 in February, jarring a reassuringly rosy outlook painted by other recent economic indicators and calling into question expectations the central bank will not take rates any lower.

The Nordic country, sheltered by robust public finances, has so far weathered the downturn spawned by the euro zone debt crisis with relative ease and recent gauges of economic activity had pointed to a moderate recovery.

But the sharp fall in industrial output raised doubts about the extent to which Sweden’s export-dependent economy can escape the pain as large swaths of the European economy, its biggest export market, tread into recession.

Industrial production fell a much worse-than-expected 5.2 percent in February and tumbled 7.1 percent year-on-year, statistics office SCB said, the sharpest fall since the aftermath of the global financial crisis, in November 2009.

“This was much weaker data than we had expected. Even if we were at the low end looking at consensus, we really didn’t expect it to come in this low,” SEB analyst Sanna Eckardt said.

Analysts polled by Reuters had expected a 0.2 percent gain on the month for a year-on-year increase of 1.1 percent.

Industry order bookings were no better, plunging 5.5 percent on the month and 8.3 percent on the year.

SCB said the sharp fall in production was judged to be temporary based on underlying data, but declined to be more specific. It noted that it had revised 2011 and January 2012 data for both orders and output, muddying the waters for analysts seeking to make sense of the fall.

“The figures are really bad and point in the opposite direction to other indicators,” Swedbank analyst Per Sellden said. “If these are the figures that represent the real picture, then it is a problem, but for the moment, one can maybe take them with a pinch of salt.”

Sweden’s Riksbank has cut borrowing costs twice since the euro zone debt crisis worsened late last year with its key repo rate now at 1.50 percent, but it has predicted no further rate cuts this year.

Recent moderately upbeat economic gauges had left a growing number of analysts expecting the Riksbank to leave interest rates on hold at its next monetary policy meeting due on April 17 with the decision announced the day after.

In addition, Swedish Central Bank Deputy Governor Karolina Ekholm, a noted dove, said on the sidelines of a conference at the end of last month that Sweden’s economy may have bottomed out, further fuelling expectations of unchanged rates.

“This will be a problem for the Riksbank. Many have believed they would keep rates unchanged (in April), but this muddies the waters. The chances of a cut have to be higher after these figures,” Sellden said.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below