Swedish Service Sector Faces Significant Slowdown in July

The Swedish service sector slowed down significantly in July. The pessimism regarding employment is now the highest since the pandemic. What is particularly worrisome is the decline in employment and it has been trending downward for quite some time, says Jörgen Kennemar, business economist at Swedbank.

» Published: August 05 2025

Swedish Service Sector Faces Significant Slowdown in July
Photo: Anders Wiklund / TT

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Purchasing Managers' Index for the service sector fell in July to 48.8 according to Swedbank and Silf. This can be compared to June's revised figure of 54.3. The setback comes after two months in the growth zone, i.e. above 50.

After a strong outcome in June, this is a setback. But it also shows that the economy in the service sector is fragile and does not really take off. It leaves its mark on employment, which recorded the lowest level since the pandemic year 2020, says Jörgen Kennemar, responsible for the analysis of the Purchasing Managers' Index.

"Very slow"

Analysts had on average expected the index to increase to 54.0 in July, according to a compilation of forecasts made by Bloomberg.

One has to take into account that the summer months are a bit more difficult to interpret, but looking at a three-month period, it is still a very slow service economy.

The total Purchasing Managers' Index, where the manufacturing industry is also included, thus fell to 50.3 in July compared to June's figure of 53.6. An index figure above 50 indicates increased activity in the sector. This will be the tenth month in a row that the index is in the growth zone.

It is naturally a challenge for economic policy. The demands increase to stimulate the economy. Now we are facing a budget in the autumn and there may be more stimulus measures from the government. In addition, the pressure on the central bank to lower interest rates increases when we do not get momentum in economic growth, says Jörgen Kennemar.

External factors

He means that external factors also play a role.

Much of this weak economy is linked to uncertainties in the world economy and a tense geopolitical situation, and that makes it extra difficult to get any real momentum in growth.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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