Sweden: Inventories point to GDP revisions

Today’s figures for inventories support the view that Q2 GDP will be revised down, but perhaps somewhat less than we had expected.

Inventories in manufacturing industry will weigh on GDP growth by around 0.5% points y/y according to our calculations. This should be compared to the total inventory effect of -0.1% point included in the Q2 GDP. We had expected inventories in manufacturing industry to shave off almost 1% of GDP y/y.

Service sector production was weak in June, and although production in the manufacturing industry surprised on the upside in June, it is still much weaker than the Q2 GDP reading. Other pieces in the puzzle ahead of the revised Q2 GDP (due Sep. 14) are revised trade balance (Aug. 28), foreign trade with services (Aug. 30) and inventories in the retail and wholesale sectors (Sep. 6). All in all, we deem Q2 GDP to be revised down substantially.

Elsewhere, figures showed that capacity utilization in the manufacturing industry stayed flat in Q2, both q/q and y/y. This is in contrast to the marked downturn in resource utilization according to NIER’s tendency survey.

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