Business sentiment in Latvia improves very slightly

Data of the business tendency surveys carried out by the Central Statistical Bureau (CSB) show that in April 2024 business environment was adjudged to be positive in retail trade and services sector, but negative in the construction and manufacturing sectors.

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Retail on the rise

In April 2024 the confidence indicator in retail trade comprised 2.1, according to seasonally adjusted data, and, compared to March, it has risen by 0.2 percentage points. According to seasonally unadjusted data, the business environment both in retail trade of food and of non-food products was positive (10.5 and 6.5, respectively). Compared to March, the fastest growth of confidence indicator (of 18.2 percentage points) was in retail sale of fuel (11.7).

Services sector slightly worse

In the services sector, the seasonally adjusted confidence indicator in April amounted to 0.9 and the business environment, compared to March, has worsened by 1.7 percentage points. According to seasonally unadjusted data, the most optimistic in April were providers of office administrative, office support and other business support activities (21.2), and providers of legal and accounting services (14.6).

In turn, the lowest business confidence indicators in April were in postal and courier activities (- 29.2), motion picture, video and television program production, sound recording and music publishing (- 16.7), as well as land transport sectors (- 11.6).

Construction still negative

In construction, according to seasonally adjusted data, confidence indicator in April comprised - 14.7, which is a decrease of 3.6 percentage points as compared to the previous month. The pessimistic assessment is related to the level of construction orders, which in April was assessed as insufficient by 33.4 % of construction enterprises. In April, compared to March, confidence indicator has increased in construction of buildings (by 1.6 percentage points), while a reduction occurred in civil engineering and specialized construction activities by 3.1 and 0.6 percentage points, respectively.

Manufacturing is morose

According to seasonally adjusted data, the confidence indicator in manufacturing in April comprised - 5.9. As compared to March, it has worsened by 0.8 percentage points. According to seasonally unadjusted data, compared to the previous month, in April the business environment has risen in the following by their share most significant manufacturing sectors: manufacture of wood and of products of wood and cork (of 2.5 percentage points), manufacture of fabricated metal products, except machinery and equipment (2.3 percentage points) and manufacture of computer, electronic and optical products (5.4 percentage points). In turn, business environment has worsened in manufacture of food products (of 2.7 percentage points), manufacture of chemicals and chemical products (1.8 percentage points) and manufacture of non-metallic mineral products (4 percentage points).

Insufficient demand a common theme

The largest share of enterprises, who have not felt any factor limiting economic activity in April, were in services sector (41.4 %), but the smallest – in construction (23.0 %). Both in manufacturing and construction the dominant limiting factor in April was insufficient demand (47.9 % and 37.0 %, respectively), but in retail trade – competition in trade sector (50.0 %). Less limiting factor was lack of labour force (from 12.7 % in services to 17.2 % in construction) and financial difficulties (from 7.4 % in services to 13 % in construction). Weather conditions had a negative effect on 28.3 % of construction enterprises.

In April 2024 Economic Sentiment Indicator in Latvia comprised 98.2 (98.0 in the previous month), while the Employment Expectations Indicator, which in the previous three months was above long-term average value (100), has dropped to 98.7.

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