Tuesday 30 June 2009

UPDATE: Encouraging Key Economic Data Out Of Scandinavia

UPDATE: Encouraging Key Economic Data Out Of Scandinavia

(Focus on regional data from Scandinavia with analyst comment)

By Joel Sherwood


Key economic data out of Scandinavian countries Tuesday came in better than expected, lifting optimism that the region may be suffering a bit less than others in the challenging global economic environment.

May retail sales in Sweden and Norway came in higher than anticipated, data from the country's respective national statistics agencies showed.

Sweden's retail trade in the month climbed 0.2% compared with the previous and was a robust 4.4% higher than May a year ago.

Most economists had expected flat or lower movement in the index compared with April and foresaw the annual increase at around half of what it turned out to be.

In addition, the April annual rate was revised up to a brisk 6% from 5%.

Norway's May seasonally-adjusted retail sales, excluding motor vehicles and fuels, rose 1.9% on the month after climbing 1.4% in April.

At a time when most economies in Europe are seeing retail sales' declines, the two consecutive months of strong retail trade in Sweden and Norway have drawn the attention of economists.

Both sets of data are "surprisingly strong" said economists at SEB.

The figures won't directly influence the Swedish central bank's near-term policy, they felt. The Riksbank is expected to hold rates steady at 0.5% at its next announcement Thursday.

However, the numbers "could make the Riksbank more comfortable when predicting positive gross domestic product growth rates next year," said Stockholm-based SEB economist Henrik Mitelman in a research note.

The Norway data "backs our forecast that the next rate change from [Norway's central bank] will be upwards," perhaps early next year," said Shakeb Syed, an economist with Handelsbanken in Oslo.

Norges Bank surprised with 25 basis point rate cut to 1.25% earlier this month.

In Denmark, first-quarter economic performance, although in decline, turned out less dismal than feared.

The country's gross domestic product contracted by a seasonally adjusted 1.1% on the quarter and was 4.1% weaker year-on-year. Most economists had forecast an on-quarter decrease of close to 2%.

Steen Bocian, chief economist at Danske Bank, said contracting GDP means the economy "is no doubt under significant pressure."

However, "it's all relative these days," he said, adding, it seems the Danish economy may be "a little bit less hurt than some others" by the global financial crisis.

Statistic agency Web sites: www.scb.se, www.ssb.no, www.dst.dk

-By Joel Sherwood, Dow Jones Newswires, +46 85 45 13 092, joel.sherwood@dowjones.com

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(END) Dow Jones Newswires

June 30, 2009 07:00 ET (11:00 GMT)

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