Sweden's Unemployment Rate Reaches 9.0% Amid Ongoing Economic Downturn
Sweden's unemployment rises to 9.0% amid economic downturn, surpassing analyst predictions.
Key Points
- • Unemployment rate rises to 9.0% in May 2025, up from 8.5% in April.
- • Non-seasonally adjusted unemployment at 9.7%, marking a significant increase.
- • Economic downturn largely attributed to U.S. tariffs and reduced consumer spending.
- • GDP growth forecast revised down to 0.9% for 2025, with slow recovery expected.
Sweden's unemployment rate has risen sharply, reaching 9.0% in May 2025, a significant jump from 8.5% in April. This trend surpasses analysts' predictions, which had expected a lower rate of 8.6%, highlighting the continuing economic challenges facing the country. The non-seasonally adjusted unemployment rate has also seen an increase, climbing to 9.7% from 8.9% the previous month, as reported by the Swedish National Statistics Office (SCB).
Elin Ottosson Bixo, a statistician at SCB, noted that despite the alarming unemployment figures, the number of permanent employees had actually increased during the same time period. She stated, "In May, the number of permanent employees increased. At the same time, unemployment remains at a higher level," indicating a complex job market scenario.
Adding to the bleak outlook, the Konjunkturinstitutet (KI) has detailed that Sweden is experiencing a prolonged economic downturn, exacerbated by external factors such as U.S. tariff policies and diminished consumer spending. The negative GDP growth reported in the first quarter of 2025 was worse than earlier predictions from KI, and the organization has lowered its GDP growth forecast for the year to just 0.9%, down from 1.7%.
KI's head of real economic analysis, Magnus Åhl, emphasized that global uncertainties, mainly tied to U.S. tariffs, have destabilized markets crucial to Sweden's export-driven economy. He remarked that while companies may not directly feel the impact of the tariffs, the uncertainty they create can hinder Sweden’s export capabilities.
Looking forward, the Riksbank is expected to implement monetary policy adjustments, including a 25 basis point cut in interest rates in June and September, potentially bringing the policy rate down to 1.75%. Despite these measures, the labor market is projected to remain sluggish, with unemployment not expected to decline until next year as businesses currently retain excess labor capacity.
Given these developments, the outlook for Sweden's economy remains cautious, with expectations for a gradual recovery driven by domestic investment and household consumption.