Sweden’s seasonally adjusted purchasing managers’ index (PMI) rose for a fourth month running in April, data showed on Monday, indicating the headlong tumble of the Nordic country’s economy may have bottomed out.
The index rose to 38.8 points in April from 36.7 points in March, data compilers Silf and Swedbank said in a statement. The gauge remained far below 50, marking the divide between economic expansion and contraction, but was well above the record low of 32.7 reached in December last year.
“These are still very, very weak figures, but the pretty decent upward trend has continued, so it looks like it (PMI) may have bottomed out,” RBS economist Peter Kaplan said.
Sweden’s export-dependent economy is facing its worst recession since the 1940s as the global downturn has hit demand for products of manufacturers such as world number two truck maker Volvo and bearings maker SKF.
The central bank has carried out an unprecedented series of rate cuts to cushion the blow of the downturn and last month slashed its key repo rate to a new record low of 0.5%.
The Riksbank sees rates staying at this level until 2011 but does not predict any further easing, though some analysts have been loath to rule out the central bank taking rates even lower in the coming months.
“This reduces the likelihood for further rate cuts and indicates that there is some hope for GDP growth later this year,” Nordea economist Torbjorn Isaksson said of the purchasing managers data.
The Swedish krona (SEK) hit a record low against the euro earlier this year and is still nearly 15% weaker from before the financial crisis ballooned in September last year, a boon to the Sweden’s struggling export companies.
“Looking at the sub-indices, the order intake is the component that has risen a fair bit from a very, very weak level in February,” Kaplan said. “It has reached 41 points compared to 28, and I think it is the (weak) krona that is important here.”
Order bookings were the single biggest contributor to the rise the overall index, the data compilers said, and the sub-index for export orders alone rose to 45.3 points in April from 39.7 in the previous month.
But conditions in the labor market remained very weak with the sub-index falling further, reflecting the wave of redundancy notices that swept the Nordic country around the turn of the year, the data compilers said. (Reuters)