Strong start to the year despite weaker than normal economy

The overall economic tendency indicator for the Gothenburg region rose to 94.2 in the first quarter of the year, from 89 in the final quarter of last year. This still indicates that the economic tendency is at a weak normal state, as is the situation in the construction and services sectors. At the same time, the manufacturing companies experience increased volumes and maintained profitability.

“The export industry has had an unexpectedly strong quarter with better functioning global supply chains. However, given the uncertain international situation, Russia’s invasion of Ukraine, high inflation and high interest rates, it is difficult to predict developments during the rest of the year. But services companies – many of which are dependent on industry – are cautiously positive,” says Henrik Einarsson, Director of Establishment and Investment Services at Business Region Göteborg.

In commerce, on the other hand, profitability has declined further and few believe in increased sales volumes going forward. The number of employees is still expected to fall, which is also the case for the construction sector. However, travel to and from the Gothenburg region has recovered well, even if the volumes have not reached pre-pandemic levels. Air traffic is still mostly European.  

Somewhat more cheerful in key markets

The forecast for this year's growth in the Gothenburg region's ten key markets has improved somewhat compared with the previous Economic Outlook report, to 1.3 percent, weighted for share of exports. GDP expectations for the US and Europe have improved slightly in forecasts from major banks and institutions, and China's growth forecast for 2023 is 5.5 per cent. Sweden's economy is expected to shrink by 1.0 per cent in 2023, and grow by 0.5 per cent in 2024, according to the NIER's (National Institute of Economic Research) latest compilation. For 2024, the export-weighted GDP growth for the Gothenburg region is expected at 1.6 per cent.

"Looking ahead, concerns that will affect the economic situation for companies is household finances, high interest rates for some time, and that shortages of skilled labour still prevail, especially within knowledge-intensive business services," says Peter Warda, senior analyst at Business Region Göteborg.

Lower unemployment and more new jobs in Gothenburg

For the third quarter in a row, job growth in the Gothenburg region is twice as high as the Swedish average, and significantly higher than in the Stockholm and Malmö regions. Strongest job growth is observed in hotels and restaurants, as well as in information and communication, but is also strong within manufacturing and knowledge-intensive business services, with tech being the most significant. 

Unemployment continued to fall and in April it was down to 5.3 percent, one percentage point below the national average. The unemployment rate continues to fall on an annual basis for all the groups we follow in the Gothenburg region’s labour market. Advertised job vacancies remain above 10 000 per month. 

"Overall, we feel that the Gothenburg region's labour market continues to be stronger than in the rest of Sweden. However, our expectation is that it will become more difficult to enter the region's job market during the year, as a result of the Swedish recession. Unemployment may thus increase slightly," says Peter Warda.

During the first quarter, 490 people were given notice per month, which is above the average for the 2000s. Among the companies that recently announced cutbacks are Forsman & Bodenfors, Stampen, Nevs, Volvo Cars and Polestar. The number of bankruptcies increased by 40 per cent and affected employees, as due to bankruptcy, by 155 per cent, compared to the same quarter in 2022. Bankruptcies in business services, commerce, and construction hit the employees hardest. A total of 518 employees in the Gothenburg region were directly affected when their employers filed for bankruptcy between January and March 2023.

Access the report and Powerpoint slides

• Report: Economic Outlook #2 2023
• Powerpoint slides: Economic Outlook #2 2023 (PDF)