(Bloomberg) -- Swedish manufacturing activity unexpectedly dipped in July, dampening hopes of a swift economic recovery as the gauge fell into contractionary territory for the first time in five months.
The Swedbank/Silf purchasing-managers index for the manufacturing sector dropped to 49.2 from a revised 53, while analysts surveyed by Bloomberg had expected an increase to 54. It’s the first time since February that the index is below the 50 mark, indicating a contraction. The reading adds to conflicting markers about the trajectory of Sweden’s economy amid an ongoing easing campaign by the central bank that has yet to gain traction.
Earlier this week, a preliminary reading of economic output in the second quarter indicated a 0.8% contraction, while a gage of consumer confidence rose to its highest level since January 2022.
The reports come as the Riksbank is assessing information that will inform its next rate decision, due to be announced in less than three weeks. The central bank has said it could cut its benchmark rate as much as three times before year-end and expectations of a reduction already this month have increased after its targeted measure of inflation fell to the lowest level in more than three years in July.
While the subindex for order intake fell to its lowest level in nine months in July, the move lower “should be interpreted with some caution,” Swedbank analyst Jorgen Kennemar said in a statement. “Industrial activity normally is lower in July due to vacations and scheduled maintenance work,” he added.
--With assistance from Simbarashe Gumbo.
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