In October business environment improved in manufacturing, construction and retail trade

Data of business tendency surveys¹ carried out by the Central Statistical Bureau (CSB) show that in October 2024, compared to September, business environment has improved in construction, retail trade and manufacturing, but slightly worsened in services sector.

“In retail trade, despite the modest turnover indicators in the previous months, business environment since August is positive and continues to improve. In services sector as a whole environment is also good, compared to other large economic sectors. Moreover, economic uncertainty in services sector (as perceived by entrepreneurs) is significantly lower than in other sectors. In manufacturing business environment has been permanently negative, and in October it was above zero in only one sub-sector (installation of machinery and equipment). The most pessimistic environment is in construction, where it has been below zero for years, however, the negative value has been reducing since July,” assesses Raimonds Lapiņš, Director General of the CSB.

Environment in retail trade continues to improve

In October 2024 confidence indicator in retail trade was 5.2, according to seasonally adjusted data, and, compared to September, it has risen by 1.9 percentage points. According to seasonally unadjusted data, business environment was positive both in retail trade of food and of non-food products (0.4 and 1.5, respectively), but in retail trade of fuel confidence indicator was negative (- 1.2). The most optimistic in October were entrepreneurs in trade of motor vehicles, where confidence indicator has increased atypical to the season to 4.5, which is the highest value since September 2023. In turn, over the last three months business environment in trade, maintenance and repair of motor vehicle parts and accessories has stabilized at a level slightly below zero (- 0.9 in October).

In services sector business environment positive in majority of sub-sectors

In the services sector, the seasonally adjusted confidence indicator in October was 2.2 and business environment of entrepreneurs, compared to September, has worsened by 0.7 percentage points. The most optimistic in October, according to seasonally unadjusted data, were entrepreneurs providing insurance services (27.9), postal and courier activities (23.0), as well as providers of advertising and market research services (14.9). The most pessimistic sectors in October were air transport and accommodation (- 33.3 in both), however, the environment is also pessimistic in water transport (- 9.7) and in the small veterinary services sector (- 11.8).

For the fourth consequent month business environment is gradually improving in construction

In construction, according to seasonally adjusted data, confidence indicator in October comprised - 11.4, which is an improvement of 1.1 percentage point as compared to the previous month. For the fourth consequent month the long-term negative environment indicator is gradually improving.

According to seasonally adjusted data, confidence indicator in October, compared to September, has increased in specialized construction activities (by 3.1 percentage points), in turn it reduced in civil engineering and construction of buildings (by 11.4 and 2.3 percentage points, respectively).

Environment in manufacturing is slightly improving

According to seasonally adjusted data, confidence indicator in manufacturing in October comprised - 6.7. As compared to September, it has increased by 0.7 percentage points.

In September, out of 23 manufacturing sectors, according to seasonally unadjusted data, only in one sector – installation of machinery and equipment – confidence indicator was positive (3.9). In other manufacturing sectors business environment was negative, however, compared to September, part of them improved: in manufacture of wood and of products of wood and cork (by 0.3 percentage points), manufacture of fabricated metal products, except machinery and equipment (by 0.9 percentage points) and manufacture of non-metallic mineral products (by 7.3 percentage points). In turn, business environment of entrepreneurs worsened in manufacture of food products, chemicals and chemical products, as well as non-metallic mineral products (by 3.0, 3.2 and 5.1 percentage points, respectively).

Insufficient demand mostly limits enterprises in industry

The largest share of enterprises, who have not felt any factor limiting economic activity in October, were in services sector (44.1 %), but the smallest – in retail trade (27.9 %). In manufacturing, construction and services sector the dominant limiting factor in October was insufficient demand (47.1 %, 32.3 % and 34.1 %, respectively), however, its significance, compared to July, has decreased in all these sectors. Insufficient demand as a limiting factor in retail trade was mentioned by 30.8 % of enterprises, which is 0.4 percentage points more than in July. For traders, competition in trade sector is more important, which in October (the same as in April and July) was mentioned by about a half of retailers.

In October 2024 economic sentiment indicator² in Latvia comprised 98.0 (98.4 – in the previous month), but employment change expectations indicator has grown by leaps and bounds to 100.8, exceeding the long-term average value for the first time since March this year.

The largest economic uncertainty in manufacturing, the smallest – in services sector

Economic Uncertainty Indicator, which describes the predictability of socio-economic situation in the country, in October, compared to September, has increased in construction and retail trade, reduced in manufacturing, but in services sector has not changed significantly. In turn, assessment of consumers³ in October, the same as in previous two months, is negative (- 0.8), thus, more than a half of consumers assess the socio-economic situation as predictable.

¹ Business surveys in manufacturing, 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 Economic Sentiment, Employment Expectations and Economic Uncertainty and Labour Hoarding Composite Indicators are calculated by the General Directorate of Economic and Financial Affairs of the European Commission (ECFIN) using the results of business tendency surveys conducted by the Member States, according to a common methodology.

³ 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