|

EU sectors in 2026: Tech outperformance, manufacturing growth gaps, small consumer gains

Production in many sectors should grow between 1% and 1.5% in 2026. Construction and staffing should see the biggest gains versus 2025, but most EU firms won't notice big changes in the growth outlook. The tech sector could grow at the speed of light, but that still pales when compared to tech growth in the US and China.

Positive growth for major sectors in 2026

Chart
Source: Eurostat, *forecasts ING Research

Technology is an outperformer, compared to other EU sectors

Production growth in the tech sector is expanding rapidly at around 4.5% and clearly outpaces other sectors. Organisations keep investing in their digital capabilities with continued double-digit growth in IT spending, including on data centre systems such as AI-optimised servers.

Growth in the tech sector is also supported by a range of tech-related incentives at the EU level, such as Horizon Europe/EIC. However, overall growth for the industry lags the US and China. Investment growth for data centres, for instance, shows that the EU is not able to keep up the pace.

Mind the growth-gap between heavy and high-tech industries

In EU manufacturing, 2026 is expected to be the second consecutive year of production growth, despite the ongoing headwinds for the energy-intensive industry. In response to the US tariffs, tariff pass-through by EU exporters to US import prices is almost 100%. So, US companies and consumers are paying almost all direct tariff costs. Furthermore, EU companies started shifting some of their sourcing and production to local US factories and increased focus on other export markets.

The main contribution to growth in manufacturing is set to come more from high-tech sub-sectors profiting from investments in defence, AI and electrification, as well as from tech-driven industries like biotech, aerospace and pharmaceuticals. The EU’s Recovery and Resilience Fund (RRF) will continue to stimulate investments in the manufacturing sector.

For manufacturers of building materials, it’s a positive trend that the EU construction sector shifts from stagnation to growth in 2026. Prospects for residential construction look more promising, with the issuance of new permits growing steadily. Output in the infrastructure segment will be boosted by a final series of grants and loans out of the EU’s RRF, which still holds over €200 billion in non-committed funds. Besides that, we’ll likely see the first projects funded by Germany’s €500bn investment plan for infrastructure and climate by the end of 2026. Modest growth in manufacturing and construction is a positive signal for the staffing industry, for which we anticipate a gradual improvement in demand for temporary workers in 2026.

The competitive landscape for manufacturing will continue to be very volatile in 2026. Renewed trade tensions can quickly reduce competitiveness. The positive impulse from efforts to diversify trade, such as the Free Trade Agreements with Mercosur and India will only materialise over time. Meanwhile, the implementation of EU policies (and the possibility of last-minute changes) is another major factor influencing the competitive environment. This includes the further roll-out of the Carbon Border Adjustment Mechanism (CBAM) and measures on non-EU steel imports.

Consumer-oriented sectors: Expect marginal gains rather than big improvements

High inflation rates have turned shoppers into savers. Further improvements in purchasing power and a minor drop in inflation in the EU are favourable for consumer-oriented sectors in 2026. Companies are eagerly awaiting such a turnaround, given that the lack of demand is a major concern for many companies, including those in food manufacturing. That’s not surprising if you consider that sales volumes in EU food retail are only growing at a modest pace, and sales volumes in food service are trailing behind.

For non-food retail, there could be an uplift in categories like electronics and furniture as we move further away from the pandemic, when consumers overpurchased on (semi-) durable goods. One thing that consumers and business travellers do spend more on is on air travel, which lifts the growth rate for aviation above the average for the transport and logistics sector.

Read the original analysis here: 3 calls for EU sectors in 2026: Tech outperformance, manufacturing growth gaps, small consumer gains

Author

ING Global Economics Team

ING Global Economics Team

ING Economic and Financial Analysis

From Trump to trade, FX to Brexit, ING’s global economists have it covered. Go to ING.com/THINK to stay a step ahead.

More from ING Global Economics Team
Share:

Editor's Picks

EUR/USD struggles near 1.1850, with all eyes on US CPI data

EUR/USD holds losses while keeping its range near 1.1850 in European trading on Friday. A broadly cautious market environment paired with a steady US Dollar undermines the pair ahead of the critical US CPI data. Meanwhile, the Eurozone Q4 GDP second estimate has little to no impact on the Euro. 

GBP/USD recovers above 1.3600, awaits US CPI for fresh impetus

GBP/USD recovers some ground above 1.3600 in the European session on Friday, though it lacks bullish conviction. The US Dollar remains supported amid a softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday. 

Gold remains below $5,000 as US inflation report looms

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains in the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

The weekender: When software turns the blade on itself

Autonomous AI does not just threaten trucking companies and call centers. It challenges the cognitive toll booths that legacy software has charged for decades. This is not a forecast. No one truly knows the end state of AI.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.