In November business environment improved in retail trade, construction and services sector

Data of business tendency surveys¹ carried out by the Central Statistical Bureau (CSB) shows that, compared to October, in November 2022 indicators in construction, retail trade and services sector have improved, but in manufacturing business environment continues to worsen.

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.

After a break of five months environment in retail trade is positive again

In November 2022 confidence indicator in retail trade, according to seasonally adjusted data, comprised 3.4. Compared to October, business environment thereof has improved by 3.7 percentage points, and this is the highest value of this indicator since March. According to seasonally unadjusted data, compared to October, in retail trade of food products confidence indicator has increased by 6.6 percentage points and reached positive value 2.0. Also in retail trade of non-food products in November confidence was positive (0.8), however, as compared to the previous month, the indicator has dropped by 2.7 percentage points. The most pessimistic in November were fuel retailers (- 23.9).

In November, the same as during the previous two months, the share of retail sale enterprises feeling no factors restricting their economic activity comprised 23 %. Insufficient demand and lack of labour force as a restrictive factor was mentioned by 26 % and 14 % of retail sellers, respectively. Competition, which is always topical restrictive factor in retail trade, was mentioned by 39 % of retailers as a limiting factor in November, which is 2 percentage points less than in October. 5 % of respondents marked that their activity is affected by geopolitical situation and the resulting instability. 13 % of respondents mentioned price rise as a restrictive factor, prices of energy resources were mentioned particularly often.

Most optimistic were entrepreneurs in insurance sector, most pessimistic – in accommodation

In the services sector, the seasonally adjusted confidence indicator in November 2022 was negative (- 0.6), but business environment of entrepreneurs, compared to October, has improved by 1.3 percentage points. 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 November were providers of insurance services (20.9). They were followed by entrepreneurs in legal and accounting sectors (14.8). The most pessimistic business environment in November was registered in accommodation (- 43.8), air transport sector (- 33.3), as well as in rental and leasing services sector (- 22.4). In November environment in general was positive in 14, but negative – in 15 services sub-sectors. In one sector – labour recruitment and provision of personnel – confidence indicator was equal to zero.

31 % of respondents of services sector have not felt any factors restricting economic activity, as compared to October, and their share has reduced by 2 percentage points. Activity of 26 % of entrepreneurs of services sector is significantly restricted by insufficient demand, but of 18 % – by lack of labour force. Both these indicators during the last months have not changed significantly. 7 % of respondents mentioned that their activity is directly or indirectly restricted by complicated and unstable geopolitical situation. 6 % of respondents indicate price rise, which increases costs of enterprises. Share of entrepreneurs whose economic activity is restricted by financial difficulties has also increased to 14 %, respectively.

Business environment has slightly improved in construction

According to seasonally adjusted data, in November confidence indicator in construction comprised -11.7, which is an increase of 2.9 percentage points as compared to the previous month.

In November, compared to October, according to seasonally unadjusted data, the assessment regarding the expected changes of employment in the next three months has increased (rise of 1.4 percentage points), but the assessment of construction enterprises regarding the current overall level of orders continues to fall (drop of 1.3 percentage points). In November confidence indicator has improved in construction of buildings (by 3.0 percentage points), but reduction is in civil engineering and specialized construction activities (by 2.5 and 3.4 percentage points, respectively).

Construction activity in November was affected by the lack of labour force (32.7 % of respondents), insufficient demand (28.8 %) and lack of materials or equipment (16.2 %). Impact of financial difficulties and other factors was indicated by 22.0 % and 11.5 % of respondents, respectively (mainly rise in prices of building materials was mentioned). In November 18.4 % of enterprises indicated that construction activity is not restricted by any factor (as compared to October this year, rise of 1.8 percentage points).

In manufacturing business environment has reached its lowest level since the middle of 2020

According to seasonally adjusted data, in November confidence indicator in manufacturing comprised - 9.6, which is the lowest value of this indicator since the middle of 2020. As compared to October, this indicator has dropped by 0.7 percentage points. According to seasonally unadjusted data, compared to the previous month, confidence indicators have worsened significantly by their share in largest manufacturing sectors – manufacture of wood and of products of wood and cork (of 7.6 percentage points), manufacture of non-metallic mineral products (5.8 percentage points), as well as manufacture of chemicals and chemical products (4.1 percentage point). In turn, business environment has improved in manufacture of food products (by 0.2 percentage points), manufacture of basic pharmaceutical products and pharmaceutical preparations (0.5 percentage points) and manufacture of electrical equipment (11.6 percentage points).

In manufacturing confidence indicator is calculated in 23 sectors. Compared to October, 17 sectors of them show a drop in confidence indicator, but only six show rise in confidence indicator.

In November, 22.3 % 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 38.3 % and 19.4 % of enterprises, respectively. Lack of labour force, in turn, was mentioned by 19.6 % of respondents. Also other factors were mentioned, of which financial difficulties (13 %), geopolitical situation and rise in prices of energy resources.

Entrepreneurs have difficulties to predict the development of economic activity

When answering the question about the factors restricting their business activity, entrepreneurs also mention the unpredictability and uncertainty of various conditions related to economic activity. The indicator, which characterizes the predictability of the development of economic activity, this year in most sectors reached its lowest values ​in March, immediately after the beginning of hostilities in Ukraine. During the summer, the uncertainty had slightly reduced, but from September, as winter is approaching and the increase in prices of energy resources becomes more topical, net² predictability of economic activity tends to decrease again. In November, this indicator was the lowest in construction and retail trade (-42.1 in both), but in manufacturing and services sector -35.4 and -28.2, respectively.

Refer to the OSP database: KRP010m; KRT010m; KRB010m; KRR040m

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.

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