The employment sector at Sauðárkrókur benefits from diversity. It has a higher ratio of person-years in services, research and development than generally found in rural Iceland, and the unemployment is lowest in the country. Manufacturing firms include a major producer of mineral wool and a woodworking company known for attractive furnishings. A wide range of quality dairy, agricultural and meat products are produced locally. The town is also known for fish processing and as the home of FISK Seafood Ltd, one of Iceland's leading fishery operations. There are a variety of service businesses, including auto repair shops, beauty parlours, hair salons and retail stores, while good restaurants, a cinema and other forms of leisure activities provide something for everyone.
In recent years, jobs at Sauðárkrókur have expanded most rapidly in public services, partly because the Institute of Regional Development was transferred there as well as a portion of the Housing Financing Fund. Furthermore, the Health Directorate at Sauðárkrókur conducts various operations and has become the town's largest single employer. The region's comprehensive college has a student body of 400, which also contributes to the employment picture and pleasantly enhances the social atmosphere in winter.
The population in the area stretching from Blönduós in the west to Tröllaskagi in the east is about 6100. About 54% or 3300 are employed. The education level of area residents is relatively high when compared with other rural areas: approximately 23% of inhabitants in this northwest area of Iceland have university degrees, the highest ratio in rural Iceland.