Swedish and Norwegian financial officers remain optimistic regarding future developments. Business conditions improved strongly last fall and are still considered favourable, a view corroborated by robust financial positions among companies and continued willingness of banks to extend credit to companies. Our respondents' positive view is also supported by businesses' greater preparedness to use potential liquidity surpluses for investment rather than debt reduction. We also note that while declining demand remains an issue, it is of less concern than previously. The slight decline in index values reported mainly reflects worries regarding the development of credit spreads and equity markets, probably due to economic instability in several European countries and their respective banking systems.
SEB's Financial Officers' survey, addressed to over 100 of the largest companies in Sweden and Norway, shows that respondents have remained optimistic over the winter. SEB's Financial Officers' Index for Sweden published today stands at 65, down from 66 in November while the corresponding index for Norway stands at 64, down from 65 in November.
Raw material costs and labour shortage growing concerns
"While financial officers in both Sweden and Norway continue to rank demand as their greatest concern for the future, Swedish respondents are much more worried by rising raw material costs. This is not an issue in Norway, where the lack of a qualified workforce and high labour costs are more problematic. Indeed, some 65 percent of Norwegian financial officers believe they will employ more staff in Norway in the next six months while only 22 percent of their Swedish counterparts have the same expectation", say Ebba Lindahl, Head of Credit Research at SEB and credit analyst Henrik Blymke.
More significant price increases imminent in Sweden
"In Norway fewer financial officers (41 percent) now expect their companies to raise prices than in November (63 percent). This is in sharp contrast to Sweden, where an increasing share of respondents (71 percent in February compared to 62 percent in November) expect to raise prices during the next six months. A similar percentage of Swedish financial officers (68 percent) believe they will be able to compensate for higher raw material costs by increasing prices", says Lindahl.
This is the twentieth publication of SEB's Financial Officers' Index Sweden and the fourth publication of SEB's Financial Officers' Index Norway. The purpose of this unique survey is to reflect changes of sentiment in the financial environment and facilitate the understanding of economic and financial trends. The survey comprises a total of 15 questions covering areas such as business climate, strategic investments, employment, views on currencies and interest rates, financial strength, and lending attitudes amongst financial institutions. The full report (in Swedish and Norwegian) is available at www.sebgroup.com\press.