Brighter in construction as Gothenburg’s economy picks up gradually
Gothenburg’s economy shows signs of improvement, with growing optimism in all sectors. Commerce is clearly the strongest performing sector, shows the first Economic Outlook report of the year.
The economic tendency indicator for the last quarter of 2024 was 95.2, suggesting a normal-weak state. This is just over 2 units higher than both the previous quarter and the last quarter of 2023.
Services companies expect demand to increase at the beginning of 2025, while manufacturing companies expect an increased order intake. Even construction companies are hopeful that volumes might increase for the first time in a long time.
But employment in these three sectors continued to decline at the end of 2024. For manufacturers, the cutbacks meant improved profitability, while services companies continue to have pressured margins. Companies in these three sectors perceive the current situation as a normal-weak economy.
Falling interest rates positive for multiple sectors
The construction sector, which has experienced six straight quarters of a recessionary state, is starting to see a few positive signals looking forward. The economic tendency indicator improved slightly to 91.4.
“Housing construction was hit hard by the rise in the interest rates and inflation that started a couple years ago. But with falling interest rates and normal inflation, households can now start spending more broadly again, and employees can expect real wage increases this year, which particularly benefits construction and services companies, and of course commerce,” says Henrik Einarsson, director of business establishment and investment services at Business Region Göteborg.
Commerce companies are increasingly optimisitic. Sales grew gradually throughout 2024. The economic tendency indicator for the second quarter of 2024 rose to 107.8 – the upper range of what is considered a strong normal economy. The number of companies who want to hire more staff clearly outnumbers those who want to reduce staff numbers.
The labour market is approaching a turnaround
Since May 2024, job growth has been negative in the Gothenburg region. During September-November 2024, the number of employed people was approximately 4,000 fewer than in the same period the year before, a decline of 0.7%.
At the same time, unemployment in Gothenburg remained lower than in the rest of Sweden, despite the job losses. In January 2025, unemployment rose to 6.6% in the Gothenburg region (+0.8%-points on an annual basis), compared with 7.2% in the Stockholm region and 9.6% in the Malmö region.
“We expect the region's unemployment rate to increase slightly at the beginning of the year before decreasing again, towards a normal level in the autumn. At that time, we also assess that the number of people facing layoffs will be down to more normal levels of around 300 per month,” says Peter Warda, senior analyst at Business Region Göteborg.
“The labour market in the Gothenburg region has long been stronger than in the rest of Sweden, and we expect that this trend will become clearer again when the economy now turns around,” says Peter Warda.
Conditions for exports an important factor
A stronger Swedish domestic market drives the economy upwards. But how fast and strong the development will be in the Gothenburg region depends on exports. Which in turn is affected by the tariffs and trade barriers that risk being introduced as a result of the US's new trade policy, and the reactions to it.
The starting point is still good. The region's important markets show export-weighted GDP growth of 2.0% this year, and 1.9% in 2026, according to forecasters, which is above the average for the period 2017-2024. But there is a risk that escalating trade tariffs could dampen development.
“Export companies are well equipped, and employment in business services has actually increased in the past year. However, we need to keep an extra eye on what is happening in the global automotive market, which is of great importance to Gothenburg,” says Peter Warda.