Economy stronger than expected, but uncertainty ahead
Despite the recent tariff turmoil, the situation in Gothenburg has improved significantly in manufacturing and services. Construction companies, however, are still struggling with weak demand, shows Business Region Göteborg's second Economic Outlook report of the year.
The overall economic tendency indicator for the first quarter was 98.9, suggesting a near normal state for companies in the Gothenburg region. This was an improvement of three units compared with the previous quarter, and up five units on the same period last year.
This development comes despite the fact that growth in Gothenburg’s key export markets has slowed considerably since the last report, due to global market uncertainties. All markets have lowered growth expectations. Export-weighted GDP growth forecasts are now set at 1.6% both this year and next year, according to forecasters, which is just below the average for the previous seven years.
“Compared to the start of Trump's previous presidential term in 2017, the euro zone is weaker and is unable to balance out a sudden decrease in exports. At the same time, relations between the countries around the world, outside of the US, are strengthening. The EU has many trade agreements in the pipeline and in the long term can create more access to new markets and increased growth,” says Peter Warda, senior analyst at Business Region Göteborg.
Rapid swings in exports
Industry orders increased during the first quarter, giving manufacturing companies hope for higher production volumes in the second quarter. The mood in the sector is considered normal. However, profitability is under significant pressure, and further staff cuts are expected during the summer.
Manufacturing companies are worried about the turmoil in global trade, and 7 out of 10 are experiencing increased competition outside the EU, according to a survey conducted in the Gothenburg region's business community from 31 March to 22 April.
“We see that layoffs are increasing in parts of the manufacturing sector, and more layoffs are expected in the automotive industry. Growth is strong in other areas, especially those related to security and defence. But overall, the number of people employed in the manufacturing sector is expected to decrease,” says Henrik Einarsson, director of business establishment and investment at Business Region Göteborg.
Meanwhile, the demand for services has increased and is expected to grow further. Employment in services might even rise next quarter. The economic tendency for the services sector improved by five units and is just below a normal state. But profitability for service companies remains problematic.
The construction sector is seeing a slight improvement in volumes, but the order backlog has decreased. They do not expect new hires in the near future, and the upward turn for the sector is expected to be delayed further.
The commerce sector reports an increase in the number of employees during the quarter, although the economic tendency deteriorated several units, suggesting a normal-strong situation. This slowdown is due to a combination of a weaker current situation and lowered expectations for the future.
Companies cautious about hiring
Even though unemployment fell slightly last quarter, the Gothenburg region job growth was negative for the tenth month in a row. Employment decreased in most industries and sectors, except for business services, transportation and warehousing.
Unemployment remains lower in the Gothenburg region than for Sweden as a whole. In April 2025, unemployment was 6.4% in the Gothenburg region, compared to 6.9% nationwide, 7.1% in the Stockholm region, and 9.1% in the Malmö region.
“Companies are still cautious about hiring staff, and overall, there is a risk that unemployment, on an annual basis, will continue to increase during the first half of 2025. However, we expect the region's unemployment to approach more normal levels sometime in late autumn 2025," says Peter Warda.
Layoff notices in the region have risen to an average of 809 people per month, which is above the median for the 2000s of just over 300 layoffs per month. Recently, companies like Novo Energy, Zeekr Technology, Stena IT, and Svenska Mässan have announced cutbacks. Volvo Cars has also announced a large cost savings package. Layoffs may increase further in the coming quarters. Bankruptcies have also increased slightly on an annual basis but now affect fewer employees.
Read the full report and download the PPT slides: Economic Outlook #2 2025