Business optimism climbs - upswing in commerce and services
Businesses in the Gothenburg region are experiencing improved conditions with the economic tendency indicator increasing strongly. Commerce has bounced back and is experiencing strong activity, while service companies are experiencing a “normal” economic state for the first time in three years. The labour market is showing signs of stabilising.
These were some of the findings of Business Region Göteborg’s fourth Economic Outlook report of 2025.
The economic tendency indicator dipped in the previous quarter but improved 9 points during the autumn to 100.2. This suggests that businesses in the region are experiencing “normal” economic conditions.
In the private service sector, which accounts for one in five jobs in the region, optimism has returned. Companies are reporting increased demand during the autumn, and the majority expect higher demand in the next six months. The number of companies expecting to increase staff is almost equal to those planning to reduce staff.
But profitability is still problematic for many service companies. The economic tendency indicator for this sector suggests a normal state, with the highest indicator score since the summer of 2022. The tourism industry, which is included here, has developed more strongly than last autumn, mainly due to more foreign visitors.
Commerce companies are experiencing a strong economy and have high expectations with Christmas approaching. Sales volumes have increased during the autumn and are expected to continue rising, which the companies hope to manage without hiring more people. A strong indicator is that the flow of people into Gothenburg's inner city increased by 147,000 visits in October compared to the same period last year. A fairly large percentage of commerce companies are still struggling with earnings.
"Gothenburg companies are now giving a very clear message about an improved situation. We are passing a turning point, and the upturn is mainly driven by consumption. Households have started to open their wallets, just as we predicted in the latest report, although they do not yet appear to be buying durable goods to any significant extent,” says Henrik Einarsson, director of business establishment at Business Region Gothenburg.
Recovery is delayed in construction and manufacturing
The situation in the construction sector remains weak, despite slightly increased construction volumes in the third quarter. The number of people employed in the sector has fallen by 2.2% compared to the previous year. More companies have seen a reduced order backlog, and more are planning to reduce rather than increase staff numbers. In a year's time, however, the situation is expected to improve significantly, suggests the latest survey.
The manufacturing sector continues to struggle with low margins, despite significant staff cuts during the year. Order intake increased during the autumn, but is expected to decline again. A majority of companies in this sector will cut staff further before the end of the year. The export situation is perceived as uncertain going forward.
Growth forecasts for key export markets remain weak
The region's ten most important export markets expect relatively weak economic activity, with export-weighted GDP growth forecasts of 1.7% both in 2025 and 2026, according to the forecasting institutes.
“The weak demand in the euro area and the rest of Europe, both this year and next year, is what is pushing down the Gothenburg region's growth forecast below the average level for the 2000s. These markets account for two out of three export SEK for the Gothenburg region. Weak European growth is slowing down the production pace in Gothenburg,” says Peter Warda, senior analyst at Business Region Göteborg.
Labour market approaching a normal state – many positive signals
The unemployment rate in the Gothenburg region fell to 6.3% in October, slightly above the level one year earlier. Here, it remains lower than in the metropolitan regions of Stockholm (7.0%) and Malmö (9.0%) and lower than Sweden as a whole (6.8%).
Employment increased by 2,000 jobs compared with the same period in the previous year. Job growth was seen mainly in hotels and restaurants, information and communication, and transportation and warehousing. The number of newly advertised permanent jobs is also increasing gradually, reaching 4,900 new job vacancies per month.
“The situation in the labour market is improving a little faster than we assessed in the previous report, mainly thanks to improvement in the services sector and increased household spending. Looking ahead, a lot will depend on how exports develop,” says Peter Warda.
Read the full report: Economic Outlook #4 2025