(Bloomberg) -- A recovery in Swedish residential construction looks brittle as this year’s uptick in activity has fizzled out in recent months, raising risks for the nascent rebound in the largest Nordic economy.
Data provider Byggfakta’s indicator of housing starts declined by 2% on month in June, and an improvement in previous months was also revised down somewhat, according to figures published on Wednesday. That dampens hope that the steep drop in homebuilding that was a sizable drawback to Sweden’s output in 2022 and 2023 will reverse in the near term.
“The situation has improved this year, but the recovery seems to be on shaky ground,” Tor Borg, Byggfakta’s head of analysis, said in a statement. “It will be interesting to see whether lower interest rates and a stronger economy can provide a boost during the second half of the year.”
The Swedish central bank has started taking borrowing costs lower from a 15-year high of 4% reached last year. Last month it flagged as many as three interest-rate cuts during the remainder of the year, as inflation is expected to stabilize close to its 2% target. That would be welcome to homebuilders that have struggled with increasing construction costs and low demand in the wake of rate hikes.
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