Employment prospects in Luxembourg’s industry and construction sectors showed tentative improvement in early 2025, though they remained below long-term averages, the national statistics bureau Statec on 19 August 2025. Industry employment rose 0.1% quarter-on-quarter in Q2 2025, reversing a 0.1% decline in Q1, while construction employment fell 0.6%, a smaller drop than in previous quarters.
In the first five months of 2025, job gains were concentrated in agri-food, with 126 additional jobs compared with December 2024, followed by metallurgy, wood products, and energy production and distribution, each adding 35 more jobs. By contrast, metal products manufacturing and machinery and equipment production recorded losses of 219 and 63 jobs respectively. Within construction, civil engineering employment remained stable, while specialised works declined by 314 jobs and building construction by 268.
Construction confidence gradually improves
Confidence in the construction sector increased gradually, yet remained below long-term averages. The building segment showed notable progress during the first half of 2025, while specialised construction works largely stagnated. Order books were slowly recovering and guaranteed activity durations extended, reflecting fewer firms reporting declines. Demand constraints eased modestly, with 57% of companies citing limited demand in July, down from 66% in February.
Inflation outlook in Luxembourg
Statec noted that had contributed to higher service prices. Stronger-than-anticipated inflation in Q2 prompted the bureau to raise its 2025 forecast to 2.1%, up from 1.9%.
Looking to 2026, falling oil prices combined with government measures reducing electricity costs by 9% over the year were expected to lower energy prices by nearly 7%, bringing overall inflation down to 1.4%. Service inflation was projected at 2.3% in 2025 and 2.5% in 2026, while food inflation was expected to rise from 2.0% to 2.3% over the same period. The next wage indexation is scheduled for Q3 2026.
Statec highlighted that the EU-US trade agreement on 27 July, which sets a maximum uniform US tariff of 15% on EU-origin goods without reciprocal EU measures, removed much of the uncertainty surrounding a potential tariff-driven inflation spike.
Broader economic context
Statec reported that GDP growth in the euro area slowed to 0.1% quarter-on-quarter in Q2 2025, following 0.6% in Q1, while US GDP rebounded 0.7% in Q2 after a 0.1% contraction in Q1. Rising trade tensions complicated the reading of economic performance in both regions, but underlying trends suggested a slowdown in the US and stable growth in the euro area excluding Ireland.