Mixed outlook for Latvian business in September

Take note – story published 3 years ago

In September business environment worsened in retail trade and services sector, but remained stable in industry and construction according to data from the business tendency surveys carried out by the Central Statistical Bureau (CSB)..

Business confidence indicators characterize the 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, the business environment is positive, if it is below zero, the business environment is negative.

According to seasonally adjusted data, in September confidence indicator in retail trade comprised 3.7. As compared to August, this indicator has dropped by 2.5 percentage points. Confidence indicator is positive both in food and non-food retail trade. Business environment is positive also in sale of motor vehicles. But in retail trade of fuel rapid drop of confidence indicator is continuing in September, compared to August it has reduced by 19.3 more percentage points and is negative. It must be taken into account that with the arrival of autumn reduction of seasonal character is typical to confidence indicators in retail trade.

The share of retail sale enterprises feeling no factors restricting their economic activity has dropped slightly. Their share in September comprised 22 %. Importance of lack of labour force as a restrictive factor has increased significantly – it was indicated by 20 % of respondents. Insufficient demand and competition in trade sector as a factor restricting their economic activity was mentioned by 23 % and 42 % retail sellers, respectively, and, compared to August, these indicators have also grown. In September, 28% of retail sellers surveyed indicated that their economic activity is significantly affected by the impact of Covid-19, this indicator continues to reduce since January when it had reached the highest value (55 %).

To view this resource, we need your consent to the use of cookies.

Business environment in services sector is worsening, but still remains positive

In services sector confidence in September 2021, according to seasonally adjusted data, was 0.6. As compared to August, this indicator has reduced by 6.3 percentage points, but the value is positive already since May. Indicators of environment differ significantly in various services sectors, and also trend of their changes differ depending on the specificities of the sector, seasonal impact and to what extent Covid-19 pandemic affects the sector. Significant rise in confidence, compared to August, was in financial services, except insurance (of 15.1), veterinary services (of 5.9) and motion picture, video and television programme production, sound recording and music publishing activities (of 5.5 percentage points). In September business environment was negative in 10 out of 30 services sectors surveyed, however, in part of them, for example, building maintenance and landscape architectural services sectors, it is assessed as normal, seasonally low indicator. The most pessimistic environment in September was in land (- 14.1) and water transport (- 21.6) sectors.

In September, 31 % of respondents of services sector have not felt any factor restricting economic activity.. However, already since March the share of respondents indicating that consequences caused by Covid-19 is a significant factor restricting successful economic activity is reducing each month. Their share in September comprised 23 %. Significance of potentially restricting factors of other businesses has not changed over the last month: insufficient demand (28 %), financial difficulties (13 %) and lack of labour force (16 %).

In construction confidence indicator is still negative

In September this year, according to seasonally adjusted data, confidence indicator in construction comprised -10.2 (compared to the previous month, reduction of 0.3 percentage points), and it was affected by a more pessimistic assessment of entrepreneurs on the development of employment in the following three months, as well as a more negative assessment regarding level of construction orders. Confidence indicator decreased in civil engineering and specialized construction activities, but slightly increased in construction of buildings.

Already for the third consequent month, construction sector was affected the most by insufficient demand and lack of labour force (indicated by 28 % and 25 % of entrepreneurs surveyed, respectively). In September, 5 % of enterprises indicated negative impact of Covid-19. Lack of materials or equipment and financial difficulties each as a restrictive factor were indicated by 14 % of construction enterprises, but impact of weather conditions – by 12 % of respondents. Compared to September last year, the number of respondents having indicated lack of materials or equipment (4.7 times more), as well as lack of labour force and bad weather conditions (rise of 11 and 4 percentage points, respectively) has risen significantly. However, the number of respondents having indicated insufficient demand (a drop of 5 percentage points) as a restrictive factor has fallen. In September this year 25 % of construction enterprises surveyed felt no factors restricting their economic activity.

Confidence indicator in manufacturing remains positive

In September confidence indicator in manufacturing comprised 0.3 (0.2 percentage points more than in August), and it was affected by a slightly more positive assessment of entrepreneurs regarding level of current orders and decrease in the level of stocks of finished products of enterprises. The largest increase of confidence indicator, compared to the previous month, was in such manufacturing sectors as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of other transport equipment, manufacture of non-metallic mineral products, manufacture of electrical equipment and repair and installation of machinery and equipment. But reduction was in manufacture of rubber and plastic products, manufacture of motor vehicles, trailers and semi-trailers, other manufactured goods n.e.c., manufacture of machinery and equipment n.e.c. and manufacture of beverages. As compared to the previous month, business environment of entrepreneurs on the development of employment is slightly more positive, but expected sale prices of goods in the following three months is less optimistic.

Compared to August this year, the share of entrepreneurs having mentioned lack of materials or equipment (indicated by 19 % of respondents) has increased, but the number of enterprises having mentioned insufficient demand and financial difficulties (indicated by 26 % and 8 % of respondents, respectively) has slightly reduced. Share of manufacturing enterprises, whose production in September was affected by lack of labour force and Covid-19, was at the level of the previous month (indicated by 25 % and 8 % of respondents, respectively). In September this year, economic activity of 31 % of manufacturing enterprises surveyed was not affected by any restrictive factor (drop of 4 percentage points, as compared to the previous month).

To view this resource, we need your consent to the use of cookies.

 

Seen a mistake?

Select text and press Ctrl+Enter to send a suggested correction to the editor

Select text and press Report a mistake to send a suggested correction to the editor

More

Most important