September 26, 2019 / 8:29 AM / 5 months ago

Swedish households gloomy about economy as job fears grow

STOCKHOLM (Reuters) - Swedish households are worried that a looming slowdown could lead to higher unemployment, data published on Thursday showed, adding further fuel to critics who want the central bank to abandon plans for a rate hike late this year or early next.

The Swedish economy has enjoyed years of strong growth, but there are now clear signs it is slowing and data on Thursday showed that households are now more worried about prospects than at any time since December 2012.

The gloom among consumers was somewhat offset by an uptick in sentiment among industrial firms, builders and retailers but confidence among companies in the service sector also fell, according to the National Institute of Economic Research.

The overall barometer fell to 94.6 points from 95 points the previous month.

The Swedish crown weakened sharply after the figures, but recovered to stand broadly unchanged. EURSEK=

Concern over the economy has been growing in recent months.

Gross domestic product expanded just 0.1% in both the first and second quarters from the proceeding three months. Unemployment jumped to 7.4% in August, worse than forecast, and inflation pressure has eased.

Nevertheless, the central bank said in early September it still expected to hike rates either at the end of this year or early in 2020.

Many analysts believe incoming data will force a rethink at the central bank, where one rate-setter - Deputy Governor Per Jansson - is already arguing for unchanged rates ahead. He called the unemployment rate “more or less a disaster”.

“The bottom line is that the Riksbank is too optimistic on pretty much everything,” economist Torbjorn Isaksson at Nordea said. “The Riksbank has to reconsider its view on the economy and thus its monetary policy stance.”

GRAPHIC: Sweden economy:

GRAPHIC: Riksbank rate, inflation and the Krona:

Reporting by Gdansk Newsroom; Editing by Alison Williams

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