Swedish retail sales rose in the month of May and came above expectations. Nevertheless, it does not signify that total consumption is out of the woods. On a sequential basis, retail sales grew 0.5 percent, whereas they rose 2.4 percent on a year-on-year basis.
The rise recorded in the month is encouraging. Nevertheless, other parts of consumption is much worse, not least of services. For instance, retail sales in April were down 1.3 percent year-on-year while total consumption was down as much as 10 percent year-on-year. Therefore, an upturn in retail sales does not necessarily indicate a rebound in total consumption.
However, households’ financial situation is stable and conditions are in place for a rebound in total consumption in the months ahead, noted Nordea Bank in a research report.
“Elsewhere, figures showed that households’ credit growth remained elevated in May, supporting the view of a recovery in consumption and illustrating the resilience on the housing market. Households’ net debt increased by around SEK 19bn in May m/m, and credits were up by 5.1 percent y/y (down from 5.2 percent y/y in April)”, added Nordea Bank.