Manufacturing back as a driving force in western Sweden

Higher production volumes are lifting the region’s manufacturing sector during the third quarter of the year. Like commerce companies, manufacturing firms now perceive the economic tendency as strong. Meanwhile, the labour market continues to improve, shows Business Region Göteborg’s third Economic Outlook report of 2026.

Three of the region’s four business sectors have improved their current situation. Construction companies are slightly more optimistic but continue to patiently await higher volumes. Combined with a modest dampening in the services sector, the overall economic tendency indicator remains in the upper range of a normal economic tendency at 102.2, up one point from the previous quarter.

Manufacturing rebounds strongly 

Over the past year, the commerce sector has been the strongest performer in the Gothenburg economy. A clear turnaround can now also be seen in manufacturing.

The sector has moved from a weak to a strong position, with its economic tendency indicator rising by ten points compared with the previous quarter. Manufacturing companies report increased production volumes. Expectations for the final quarter of the year have strengthened considerably, although most companies still anticipate further workforce reductions and continued pressure on prices.

“After a sluggish start to the year, we are seeing manufacturing companies become more optimistic. Production volumes are increasing again and expectations for the export markets have improved. This helps balance and strengthen the regional economic outlook,” says Henrik Einarsson, Head of Analysis at Business Region Göteborg.

The commerce sector continues to perform strongly, with expectations of higher sales and increased employment during the remainder of the year. 

Service companies remain positive about future demand but continue to struggle with profitability and capacity utilisation in many areas. 
Construction is still the only sector experiencing a weak economic tendency. Construction companies continue to wait for order books to grow and expect a cautious increase in construction volumes during the fourth quarter.

Labour market moving in the right direction

The labour market in the Gothenburg region continues to strengthen gradually. Job growth has now remained positive for fourteen consecutive months, and employment increased by 0.7 per cent during the period April to June compared with the same period last year.

At the same time, unemployment has fallen to 6.4 per cent, which is 0.3 percentage points lower than a year ago. The number of layoffs being announced also declined by nearly 45 per cent compared with the corresponding period last year.

“The labour market is moving in the right direction, with rising employment, lower unemployment and layoffs. At the same time, we can see that many companies remain cautious about hiring,” says Peter Warda, Senior Analyst at Business Region Göteborg.

Slightly brighter international outlook

International growth prospects have improved somewhat since the previous report. The export-weighted GDP growth forecast for the Gothenburg region’s ten most important markets has been revised upwards to 1.8 per cent for 2026. Denmark is performing notably better than previously expected, while China is still expected to remain the region’s fastest-growing major export market.

At the same time, several sources of uncertainty remain. Trade tensions, developments in the Middle East and the risk of renewed inflationary pressures continue to affect business confidence and future expectations.

Read the full report: Economic Outlook #3 2026