SWEDEN: Participation Rates Off Autumn ’24 Highs, January Cut Still In Play

The Swedish December LFS unemployment rate was in line with consensus at 8.5%, two tenths above November’s levels. That keeps the 3mma of the unemployment rate steady at 8.40%, in line with the Riksbank’s December MPR forecast.

• Taken alongside the Public Employment Service’s unemployment claims data, the deterioration of the Swedish labour market appears to be easing, but overall conditions remain subdued. There should still be enough evidence to support a 25bp cut at next week’s gathering, but it may be a close call, with the Board divided on how fast to proceed with additional easing.
• The increase in unemployment was mainly driven by an uptick in participation, with employment growth at 0.8% M/M. However, 3m/3m employment growth was negative for the third consecutive month at -0.1%.
• Since Autumn 2024, the 3mma participation rate has started to roll over. This trend will be worth tracking, with declining participation (and by extension, hours worked) not supportive of the Riksbank's projection for an economic recovery in 2025.