Sweden's Economy Sees Slight Contraction as Household Consumption Drops in Late 2025

In October 2025, Sweden's economy experienced a slight contraction, with GDP decreasing by 0.3% compared to the previous month, according to preliminary data from Statistics Sweden (SCB). Despite this monthly decline, the year-on-year GDP rose by 2.1%, showing some resilience. The economic weakening was largely driven by a 0.9% fall in household consumption from September to October and reduced production within the business sector, notes SCB economist Melker Pettersson Loberg.

Amid these economic shifts, the labor market showed signs of improvement. New applications for unemployment benefits in November 2025 fell by 5.6% compared to September and exhibited a significant 16.1% decrease compared to November 2024. This trend is captured by the A-kasse-indikatorn, which tracks monthly unemployment insurance claims and is used as a gauge of labor market health.

Together, these indicators suggest a complex economic environment where household spending is contracting, exerting downward pressure on GDP, while labor market conditions are gradually improving with fewer new unemployment benefit applications. The dip in household consumption points to cautious consumer behavior that may influence Sweden’s economic trajectory going into 2026.