Capacity utilisation according to Statistics Sweden and the National Institute of Economic Research, is still at a high level but is moving downwards. The downswing in the  BIS Review 113/2008  3  Swedish economy has come sooner and been more pronounced than was expected only a few months ago. It covers the manufacturing industry as well as the retail and service industries. Households have clearly become more pessimistic, not least with regard to the national economy and the labour market. For example, the survey conducted by the National Institute of Economic Research at the end of 2007 showed that an excess amount of 40 per cent of the households believed that unemployment would be lower in a year's time. Now, however, an excess amount of 50 per cent of the households believes that unemployment will be higher one year ahead. This deterioration in general sentiment has been accompanied by a fall-off in private consumption. This applies mainly to capital goods, which is common at the beginning of an economic downswing. But it is not only private consumption that has declined; investments and exports have also weakened. GDP growth has been revised downwards for both 2008 and 2009, although the forecast predicts a recovery in 2009 in line with developments abroad and it is believed that Sweden's exports will be an import driving force in this context. However, I am far from sure that such an upswing in economic activity will actually take place.
In our latest assessment this was based on the belief that inflation was somewhat higher than now proves to be the case. But monetary policy does not have such a degree of precision that it can control inflation to a tenth of a degree. And, moreover, inflation in July was high and far above the inflation target even after the downward revision of the figure. In the discussion ahead of the interest rate decision, I and other members of the Executive Board highlighted the weak labour market indicators which uniformly pointed to a weaker development of employment, which is also in line with the Riksbank's forecast. After the decision, the Labour Force Survey for August has been presented. This shows that employment increased by a moderate 0.5 per cent on a 12-month basis, which is marginally lower than the Riksbank's forecast. At our September meeting, we had access to the initial version of the National Accounts for the second quarter. These showed that GDP did not increase at all compared to the previous quarter and increased by only 0.7 per cent on a calendar-adjusted12-month basis. Now that the revised version of the National Accounts has been published, we can see that growth in the first two quarters has been marginally adjusted downwards in both cases. This means that growth in the first quarter was 2 per cent on a 12-month basis and with calendar effects taken into account. The corresponding figure for the second quarter was 0.6 per cent.