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The bleeding of jobs in Sweden's industrial sector continued Wednesday as AB Volvo (VOLV-B.SK) said it would lay off another 1,543 workers due to weak demand for its trucks, construction equipment and engines.

Volvo has now given notice to roughly 16,300 permanent and temporary workers since September, with a little more than half of those in Sweden. It had 101,381 workers at the start of 2009.

Unemployment is swelling in Sweden and its primarily industrial workers who have joined the jobless ranks. In recent months, big Swedish companies, such as metal-cutting tool maker Sandvik AB (SDVKY), industrial bearings manufacturer SKF AB (SKF-B.SK) and air compressor maker Atlas Copco AB (ATCO-A.SK) have announced thousands of job cuts in response to a collapse in demand as a result of the global financial crisis. All are global leaders in their respective fields.

Other big employers in Sweden that have given workers notice include Ford Motor Co.'s (F) Volvo Cars and General Motors Corp.'s (GM) Saab Automobile AB.

Unemployment rose to 8% in February from 7.3% in January and 6.1% a year earlier. March unemployment data will be released Thursday. The government forecasts that unemployment will peak at 11.7% in 2011 before starting to fall.

Nordea Bank economist Torbjorn Isaksson said Sweden's industrial sector "reacted very fast to the sudden sharp drop in demand that we saw last autumn. It didn't waste any time" before laying off workers.

He said Sweden's unemployment now was set to spread from the industrial sector to other areas and that the jobless rate would climb steadily but without layoffs from big companies.

"The big layoff wave is now likely behind us," he said.

Volvo, in announcing the new layoffs, cited the "sharp decline on world markets for heavy vehicles."

The company's truck division, the world's largest truck maker by sales after Daimler AG (DAI), is giving notice to 655 employees. The construction equipment unit is laying off 125 workers and 100 consultants.

Volvo Penta, which makes boat engines, is dismissing 108 employees. The powertrain division, which coordinates Volvo's engine-related operations, is laying off 655 workers.

At 1315 GMT, Volvo's shares traded up SEK3.1, or 6.3%, at SEK52.50, outperforming the broader Nordic market, which traded up 0.8%.

Danske Bank analyst Carl Holmquist said investors view Volvo as prudently slashing costs in tough times.

"They're adjusting their cost situation. Somewhere along the line shareholders should benefit from the lower costs," Holmquist said.

But he also noted that Volvo's new round of firings "indicates the demand situation hasn't improved out there." Volvo Chief Executive Leif Johansson told Dow Jones Newswires last month that demand for trucks has had "an incredibly weak start to the year." He said he thinks the industry's total sales of heavy trucks in Europe will fall about 40% this year.

Volvo reports its first-quarter earnings Friday. Eleven analysts polled by Dow Jones and FactSet on average forecast it will post a net loss of 2.75 billion Swedish kronor ($323 million).

 
   Company Web site: www.volvo.com 
 
   -By Ola Kinnander, Dow Jones Newswires; +46-8-5451-3097; ola.kinnander@dowjones.com