Business environment in September negative in all business sectors
In September 2022, for the fourth consequent month, business confidence indicators are negative in all business sectors. Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) shows that, compared to August, indicators in construction, services sector and manufacturing continue to reduce, but in retail trade business environment has slightly improved.
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.
Business environment in retail trade negative, but better than among entrepreneurs of other sectors
In September 2022 confidence indicator in retail trade, according to seasonally adjusted data, comprised - 1.9. As compared to August, this indicator has risen by 1.0 percentage point. With the onset of autumn, the deterioration of business environment is typical in retail trade, therefore, according to seasonally unadjusted data, compared to August, confidence indicator in retail trade of food products has fallen by 2.9 percentage points, reaching value -2.6, but in retail trade of non-food products, reducing by 2.8 percentage points, the indicator has dropped to 3.5. Business environment in retail trade of fuel has worsened significantly in September. As compared to August, this indicator has reduced by 16.7 percentage points and dropped below zero (-9.0). The most optimistic in September were entrepreneurs in trade of motor vehicles (6.2), where business environment indicator is exactly the same as a month ago. In turn, in sale, maintenance and repair of motor vehicle parts environment indicator has worsened by 2.7 percentage points and equals zero.
In September, 23 % of retail sellers indicated that they feel no factors restricting their economic activity, and this is one percentage point less than in August. Insufficient demand and lack of labour force as a restrictive factor was mentioned by 27 % and 17 % of retail sellers, respectively. Competition is always topical in retail trade, therefore, an especially significant restrictive factor is competition in own trade sector. In September it was mentioned by 38 % of retail sellers, and that is 2 percentage points less than in August. 8 % of respondents marked that their activity is affected by geopolitical situation and the resulting instability. 17 % of respondents mentioned price rise as a restrictive factor, prices of energy resources were mentioned particularly often. Compared to August, share of these respondents has increased by 7 percentage points.
The most optimistic entrepreneurs are in computer programming, the most pessimistic – in security services
In the services sector the seasonally adjusted confidence indicator in September 2022 was negative (-3.4) and business environment of entrepreneurs has worsened by 3.0 percentage points, compared to August. As usual, indicators of environment differ significantly in various services sectors, and also trend of their changes differ depending on the specificities of the sector and seasonal impact. According to seasonally unadjusted data, the most optimistic in September were entrepreneurs providing computer programming services (14.8). They are followed by motion picture, video and television programme production, sound recording and music publishing, distribution and exhibition activities (10.7). The most pessimistic business environment was recorded in security and investigation services sector (-19.7), water transport services (- 18.1), as well as in publishing (- 13.7). In September environment in general was positive in 12, but negative – in 18 services sub-sectors. Compared to August, environment has worsened in 22 sub-sectors, but improved – only in 8.
32 % of respondents of services sector have not felt any factors restricting economic activity in September, their share is rather stable and since the beginning of the year it is fluctuating from 32 % to 36 %. Activity of 27 % of entrepreneurs of services sector is significantly restricted by insufficient demand, but of 19 % – by lack of labour force. Also these indicators during the last months have not changed significantly. The same as a month ago, 9 % of respondents mentioned that their activity is directly or indirectly restricted by complicated and unstable geopolitical situation. 8 % of respondents indicate price rise, which increases costs of enterprises. Compared to August, share of these enterprises has increased by 5 percentage points.
Confidence indicator in construction the lowest since February 2021
According to seasonally adjusted data, in September confidence indicator in construction comprised -17.2, which is an decrease of 1.6 percentage points as compared to the previous month. In September, according to seasonally unadjusted data, the assessment of construction enterprises regarding the expected development of employment in the next three months has reduced sharply (of 21.2 percentage points), but the current overall level of orders has improved by 1.6 percentage points. Confidence indicator in September has fallen in all construction sub-sectors, but the largest drop is in civil engineering (of 16.2 percentage points).
Construction activity in August was mostly affected by the lack of labour force (40 % of respondents), insufficient demand (26 %) and lack of materials or equipment (22 %). Impact of financial difficulties and other factors was indicated by 21 % and 14 % of respondents, respectively (mainly rise in prices of building materials and energy resources was mentioned). The same as in August, in September 22 % of respondents indicated that at the moment construction is not restricted by any factor.
The most significant restrictive factors in construction sub-sectors are lack of labour force (indicated by 43 % of respondents in construction of buildings and 44 % in civil engineering, respectively) and insufficient demand (27 % of respondents in specialized construction activities).
Business environment in manufacturing continues to worsen
According to seasonally adjusted data, in September confidence indicator in manufacturing comprised -8.4 (drop of 2.7 percentage points, compared to August). According to seasonally unadjusted data, compared to the previous month, confidence indicators have worsened significantly in two largest by share manufacturing sectors – manufacture of wood and of products of wood and cork (of 3.7 percentage points) and manufacture of food (3.5 percentage points). In turn, business environment improved in manufacture of chemicals and chemical products (of 2.0 percentage points) and manufacture of basic pharmaceutical products and pharmaceutical preparations (3.0 percentage points). Growth in the sectors mentioned was mainly affected by a more positive assessment regarding the level of production orders and the expected production activity during the next three months.
In manufacturing confidence indicator is calculated in 23 sectors. Out of them, in September, compared to August, 14 sectors of them show a drop in confidence indicator, one sector is without changes, but in 8 sectors business environment has improved.
In September, 24 % of manufacturing enterprises have not felt any factor restricting economic activity. Insufficient demand and lack of materials or equipment as a restrictive factor was mentioned by 33 % and 23 % of enterprises, respectively. Lack of labour force, in turn, was mentioned by 17 % of respondents. Also other factors, of which financial difficulties (13 %), geopolitical situation and rise in prices of energy resources, were mentioned.
In September 2022 economic sentiment indicator comprised 90.83, (93.9 – in the previous month). 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 indicator4, as a basis.
1 Business surveys in industry, construction, retail trade and services sector are carried out by the CSB monthly, accordingly methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys co-financed by the European Commission.
2 Net (balance) is calculated as difference between positive and negative answers of entrepreneurs surveyed, which are expressed in per cent.
3 Value of the indicator exceeding 100 means that numeric characteristic of the economic situation exceeds long-term average value (2000–2021). While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.
4 Consumer survey is carried out monthly by the enterprise “Latvijas Fakti” accordingly methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys co-financed by the European Commission.
Media requests:
Communication Section:
E-mail: media@csp.gov.lv
Phone: +371 27880666
More information on data:
Ieva Vanaga
Trade and Services Statistics Section
E-mail: Ieva.Vanaga@csp.gov.lv
Phone: +371 67366738
Sandra Vītola
Industrial and Construction Statistics Section
E-mail: Sandra.Vitola@csp.gov.lv
Phone: +371 67366739
Share