Business demand speeds up considerably after the financial crisis.

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Sweden’s upward business cycle gained more ground in second quarter as the economy continued its strong development in many areas, the statistics office concluded in a sum-up of the country’s economy.

Household optimism has maintained and investments distinctly increased while production in business accelerated. Improvements in the labour market gained a broader platform and now also include woman-dominated industries, Statistics Sweden wrote in the report The Swedish economy - statistical perspective.

Summary of the report
GDP rose by 1.9 percent in the second quarter in seasonally adjusted figures in comparison to the previous quarter. This is the highest growth rate increase since the second quarter of 2000. This upturn is mainly explained by the strong growth in business, where demand has once again sped up considerably after the financial crisis. In calendar adjusted figures, GDP rose by 4.6 percent compared to the corresponding quarter of last year. The non-adjusted GDP growth amounted to 5.2 percent, and changes in inventory accounted for half of this figure, 2.6 percentage points. Strong inventory development is mainly a consequence of the periods of comparison, where 2009 amounted to a very low result. Thus, due caution is warranted when considering this strong growth rate.

Continued expansive upturn in economy
Net exports, despite having proven the engine for change earlier, were not so in this upturn. In fact, the contributions to GDP-growth from net exports have been in negative figures for the last four quarters. This time the upturn is instead distributed over a wider purview of the economy, with strong growth in consumption and investment. The labour market development was especially strong but the normal pattern between production and employment appears to be broken. Instead, now production and employment largely increase at similar rates.

Demand for goods was greater than demand for services
Both imports and exports had positive development while the net exports held back GDP growth. Although exports increased strongly, imports increased even more. This is a consequence of a large volume of imports to the fast-growing parts of the economy, such as household consumption, the export goods industry, and the fixed gross capital formations. As was the case with the first quarter, it was mainly a demand for goods that increased while trade in services only rose marginally. The statistics can now show more distinctly how countries that were harshly affected by the financial crisis now slowly begin recovery, and thereby see an increasing demand for Swedish goods.

Household consumption increased by 2.6 percent compared with the corresponding quarter of last year. The continued good developments in incomes, low interest rates, and increased unemployment are probably very important factors behind households' optimism. Demand for durable goods increased, mainly in terms of automobiles and home electronics. The lower savings ratio is an indicator that part of the household consumption is being financed through reduced savings.

Fixed gross capital formations have increased since the third quarter of 2009, based on quarterly comparisons. Compared to earlier recovery periods, the turn in investments was unexpectedly short after the restart of industrial production. Machines and dwellings led the development of investments, and it was mainly in the energy sector as well as in transport and communications that investments in machinery increased.

Production in the business sector accelerated in the second quarter and the recovery, having gone on for five consecutive quarters, offers an ever more robust impression. Even a cursory glance will call to mind that the development for production in business is similar to the rebound from the bottom after the rapid decline in the fourth quarter of 2008 and the first quarter of 2009.

Labour market conditions continued to improve. For the first time during this business cycle upturn, increased employment and decreased unemployment were noted for both men and women. The number of hours worked increased considerably more than the number of employed persons, which can call for a certain degree of caution for recruiting new employees.