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Jobless rates in Sweden and Denmark came in lower than expected in July, government data showed on Thursday, but economists were hesitant to predict an improvement yet in the Nordic labour market after months of weakness. While the entire Nordic region has been hit by the global downturn, the jobs market varies tremendously from country to country, Reuters report.
In Sweden and Finland, the ranks of the unemployed are expected to swell past 10% in the coming quarters. Denmark is less reliant on heavy industry and Norway is helped by its vast oil revenues, so those nations have been more sheltered, keeping their jobless rates much lower.
7.9% of the workforce in Sweden, the region's biggest economy, were out of a job in July, unadjusted data showed. The market had expected an 8.3% rate and it was down sharply from 9.8%in June.
"Unemployment was surprisingly low, considerably below what we and others had expected," said Elisabeth Kopelman analyst at Swedish bank SEB. "But there have been large swings in unemployment during the summer."
Kopelman and other economists noted that the labour market itself had been shrinking and that this played a part in the lower jobless rate.
A particular quirk in the way the Swedish statistics office produces the data also means the July rate tends to decline. When thousands of students come home in June, they get captured in the statistics office's survey and are classified as unemployed, one of its statisticians said. But the next month, many go on holiday and don't get counted, which tends to depress the July figure. "Seasonally adjusted, the trend is still one of rising unemployment," Kopelman said.
But some analysts see glimmers of hope for Swedish workers. Nordea analyst Johanna Jeansson pointed to fewer layoff notices and less pessimistic staffing plans from companies as signs that the autumn numbers might not be so bleak.
The Swedish government said last week it expects an unemployment rate of 8.8% this year and that next year it would balloon to 11.4%.
In Denmark, which is less reliant than Sweden on the battered engineering sector, the jobless rate held steady at 3.7 percent in July, below a forecast for 4.0%. "This number is a positive surprise, but there is no doubt that today's figures disguise an underlying increase in unemployment," said Sydbank economist Christian Heinig. But he added "there is justified hope that we are moving towards much more subdued rate of increase in unemployment than we have generally seen through 2009."
Norway, which has the lowest unemployment rate in the region thanks to its oil-focused economy, had a jobless rate of 3% in August, government data showed. While the Swedish central bank has flagged that key rates will remain at record lows for another year to counter the economic downturn, its Norwegian counterpart is expected to start raising borrowing costs soon.
"The numbers were good, or at least less bad than what we have seen lately," Shakeb Syed, economist at Handelsbanken, said, commenting on Thursday's Norwegian jobless data. "It supports our expectation of a hike in October."
Finland's unemployment rate rose to 8.9% in July from 8.8% in June, according to data earlier this week. Uncertainty over an economic turnaround has increased recently, and the government expects unemployment to rise to 10.5% next year.
"Unemployment will continue to rise in Finland. The reason is that the economy has been hit relatively hard by a stronger Euro," said Peter Kaplan, economist at RBS.