Swedish Service Sector Continues Robust Expansion

Sweden's service sector continued its strong pace of expansion in May despite rising cost pressures and delivery times, survey results from Swedbank and the logistics association SILF showed Friday.

The service purchasing managers' index reading was 68.2, unchanged from April. A reading above 50 shows expansion in the sector. The reading is well above its historical average.

"Cost increases and rising delivery times have not prevented the service sector from expanding, although the downside risks have increased now that households' consumption space is limited due to high inflation while the real estate market faces increased challenges due to higher future interest rates, Swedbank analyst Jorgen Kennemar said.

The employment sub-index rose, while other indexes declined, yet all remained above 60.

The delivery times sub-index marked the highest level, signaling high demand pressure that could be due to supply disruptions and increased shortage of labor.

The input price sub-index eased for the second straight month, but remained at an elevated level suggesting widespread and rising price pressure compared with the beginning of the year.

The composite PMI, which combines manufacturing and services, edged up to 64.6 from 64.5 in April.

The divergence has increased as growth is increasingly being driven by the service sector, while industry is losing momentum, Kennemar said.

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