Business environment continued to decline in February in Latvia

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Data of business tendency surveys published March 1 by the Central Statistical Bureau (CSB) show that in February 2021 business confidence indicators improved only in the services sector.

In construction and industry the business confidence indicators worsened slightly, but in retail trade sector there was a significant drop.

Business confidence indicators characterize general situation in the sector and they are acquired by carrying out business surveys in industry, construction, retail trade and services sector. If the indicator is above zero, business environment is positive, if it is below zero – business environment is negative.

Confidence indicator in retail trade continues to reduce

According to seasonally adjusted data, in February confidence indicator in retail sale was -19.4, which is a drop of 3.6 percentage points as compared to January. Confidence indicator has reduced both in food and non-food retail trade, but increased in retail trade of fuel. Business environment has also worsened in sale of motor vehicles, but improved in sale of motor vehicle parts and accessories, maintenance and repair of motor vehicles. The lowest indicator (-37.7) is in retail sale of non-food products, and for the second month it is below the lowest indicator of 2020 in April (-30.4), also exceeding the lowest value of economic crisis in 2008–2009 (-36.3).

Business environment is the lowest in services sector

In services sector in February, according to seasonally adjusted data, confidence comprised -22.5. As compared to January, this indicator has grown by 4.6 percentage points. Especially low confidence indicators still are in catering (-61.2 %), accommodation (-66.7 %), as well as in transport by air (-43.1 %). It must be mentioned that, compared to January, in catering and accommodation, as well as in travel agency and tour operator sector business environment has improved. In February positive confidence values were in insurance sector (23.7 %), telecommunication services (2.7 %) and computer programming (5.2 %). On the background of other services sectors especially optimistic are providers of postal and courier activities (33.3 %).

Confidence indicator in construction sector the second lowest among all areas

In February this year, compared to the previous month, confidence indicator in construction has fallen by 0.4 percentage points, reducing to -21.6, which was affected by a more pessimistic assessment of entrepreneurs regarding level of construction orders. Confidence indicator decreased in construction of buildings and specialized construction activities, but increased in civil engineering.

Confidence indicator in manufacturing still is the highest

In February confidence indicator in manufacturing comprised -7.4 (0.7 percentage point less than in January), which was affected by a negative forecasts of company managers regarding level of production orders. The largest drop of confidence indicator, as compared to January, was in such manufacturing sectors as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of chemicals and chemical products, manufacture of furniture, manufacture of motor vehicles, trailers and semi-trailers and manufacture of wearing apparel. 

In February 2021 economic sentiment indicator comprised 88.5, which is 1.3 points more than in January. Economic sentiment indicator characterizes general socio-economic situation in the country during a certain period of time (month), and it is calculated by the European Commission, Directorate-General for Economic and Financial Affairs for all EU countries according to a common methodology, taking 15 various seasonally adjusted components included in industry, construction, retail trade and services sector, as well as in consumer confidence indicator, as a basis.

You  can read the full report on the Central Statistical Bureau website.

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