Business optimism continues to improve – but sentiment is divided

After last quarter's big lift, the economic tendency indicator showed further improvement, landing on 101.9, up two points on the previous quarter. This suggests businesses in the Gothenburg region perceive the current situation as normal. 

Sales volumes continue to increase in the commerce sector and service companies are noticing increasing demand. In both sectors, the economic tendency indicator suggests a strong situation (103.1 and 103.7, respectively). At the same time, a majority of these companies are reporting a decrease in the number of employees, either this quarter or in the future; and profitability problems exist in both the commerce and services sectors. 

The improving overall economic tendency is being partly driven by increased consumer spending. Companies in the hospitality sector have benefited from an increase in the number of guest nights, which rose 7.6% in 2025 compared to 2024. Guest nights in the Gothenburg region hit an all-time high last year, totalling 6.4 million. The number of people employed in hotels and restaurants in November grew by 3.4% year-on-year. Meanwhile, in January, 10% more people moved around Gothenburg's inner city than in the same month in 2025.

Household spending driving the economy

In the manufacturing sector, the year started sluggishly, with the situation perceived by companies as weak (94.0). Production volumes fell slightly and several companies are reporting reduced order intake on the export market. Profitability and employment have weakened.

The construction sector is seeing slight improvement, though the situation remains weak (93.9). Construction volumes are increasing cautiously, yet companies remain positive about the situation one year from now.  

“In a relatively short time, households have become the driving force of the Swedish economy. Export companies are facing tougher international competition, and many have been affected by the strengthened Swedish krona. However, we expect exports to pick up in the spring,” says Henrik Einarsson, director of establishment and investment services at Business Region Göteborg.

Expectations slightly stronger for key markets

The Gothenburg region's ten most important export markets show combined, weighted GDP growth of 1.9%, both this year and next year, according to forecasting institutes. This is 0.2%-points stronger than we saw in the previous report.

“The situation in Europe looks somewhat better than before, especially in Sweden and Denmark. Yet demand in the euro area remains weak and geopolitical unrest persists. New trade agreements with the Mercosur countries, India and soon Australia are, however, positive developments,” says Peter Warda, senior analyst at Business Region Göteborg, and author of the report.

“The strengthened relations with India are extra valuable for us in the Gothenburg region, which has a large and growing network of Indian residents and Indian-owned companies. Companies based in Gothenburg have a good chance of increasing their exports to India,” he adds.  

The labour market is divided

The situation in the labour market is somewhat divided, which indicates that stabilisation will occur during the second half of the year.

The unemployment rate is now falling for the first time on an annual basis since 2023. In January it was 6.4% in the Gothenburg region, which is lower than for Sweden (6.8%), the Stockholm region (7.0%) and the Malmö region (9.1%). 

In the Gothenburg region, employment for the period August-November increased year-on-year by 0.8%, equivalent to 4,500 more people in work. The increase is higher in percentage terms than in the Stockholm region and Sweden, while employment in the Malmö region grew by 1.1% during the same period. 

Meanwhile, the number of advertised jobs in the region during the period October-December 2025 fell by 6.2%, compared to the same period the year before. And the number of people given layoff notices increased by 50%. 

“The labour market’s pace of stabilisation will depend largely on the situation for exports. We don’t expect to see more normal levels for unemployment and layoff notices until the second half of 2026,” says Peter Warda.

Read the full report: Economic Outlook #1 2026