In July business environment is improving in manufacturing and retail trade

Data of business tendency surveys¹ carried out by the Central Statistical Bureau (CSB) show that in July 2025 business environment continues to improve in manufacturing, and that is the most optimistic during the last three years. Despite the slight decline in July, an uncharacteristically optimistic environment remains in construction sector. At the same time, environment in services sector has slightly worsened, while in retail trade – it has improved.

Business environment in manufacturing continues to improve

Confidence indicator in manufacturing, according to seasonally adjusted data, comprised - 3.3 in July. Compared to the previous month, it has increased by another 0.4 percentage points, preserving the highest value during the last three years.

Seasonally unadjusted data show that out of 23 manufacturing sectors surveyed in July, compared to the previous month, in 8 sectors business environment has improved, in 14 – worsened, but in one hasn’t changed.

According to seasonally unadjusted data, in July, compared to the previous month, business environment has improved in the following by their share most significant manufacturing sectors: manufacture of computer, electronic and optical products (by 4.7 percentage points), manufacture of rubber and plastic (5.5 percentage points). In turn, business environment worsened in manufacture of wood and of products of wood (by 1.2 percentage points), manufacture of food products (2.2 percentage points), manufacture of electrical equipment (5.4 percentage points). Business environment in manufacture of beverages has worsened rapidly. For the past six months it had been one of the most optimistic manufacturing sub-sectors with positive confidence indicators, but in July environment declined by 16.8 percentage points and turned negative (- 8.9).

Business environment in construction is slightly worsening, in general preserving atypically high value in the sector

Typically low confidence indicator in construction, according to seasonally adjusted data, was - 9.0 in July. Compared to June, it has reduced by 0.5 percentage points, in general preserving atypically high value in the sector.

Due to the seasonality of construction sector, business environment usually reaches its highest value of the year in April or May and continues to reduce in the upcoming months of the year. Also this year, according to seasonally unadjusted data, since the beginning of the year business environment is improving monthly. In May it reached maximum value 1.9, but reduced in the following months, dropping to negative value in July (- 3.7). Compared to the previous month, confidence indicators fell in all construction sub-sectors: in construction of buildings environment is negative (- 8.9), in specialized construction activities it equals zero, but in civil engineering confidence indicator still remains positive (0.6).

Business environment is improving slightly in retail trade

In July confidence indicator in retail trade was 1.4, according to seasonally adjusted data, and, compared to the previous month, it has risen by 0.8 percentage points.

Seasonal improvement in business environment in spring is characteristic to retail trade, reaching the maximum values in annual terms in May and June. Therefore, the decline in the seasonally unadjusted confidence indicators in almost all retail trade sub-sectors in July is mainly explained by seasonality. Compared to the previous month, business environment in retail trade of food products worsened by 2.7 percentage points, and in retail trade of non-food products by 1.3 percentage points. Confidence indicator in retail sale of fuel has dropped by 2.9 percentage points, maintaining high positive value (25.0). In July, environment in sale of motor vehicles improved sharply (by 8.2 percentage points), reaching its highest value since August 2023.

The amount of optimists and pessimists is equal in services sector

In the services sector, the seasonally adjusted confidence indicator in July was zero and business environment, compared to June, has worsened by 0.9 percentage points.

The most optimistic service providers in July are among sectors with seasonal increase in economic activity during the summer: accommodation (46.1), rental and leasing services (36.0), travel agency and tour operator services (27.5). Insurance (24.4) and labour recruitment and provision of personnel (20.2) are also among the most optimistic sectors. Environment in postal and courier services improved sharply (by 20.9 percentage points), placing them among the most optimistic sub-sectors of the services sector in July. The lowest confidence indicators in July were recorded in transport sectors: land transport (-8.0), air transport (-6.9) and warehousing and support activities for transportation (-7.8). Providers of security services (-9.9) also were among the most pessimistic in July.

In total, out of 30 services sub-sectors surveyed environment of 18 sub-sectors is positive, of 12 – negative.

Insufficient demand mostly limits economic activity in manufacturing

The largest share of enterprises, who have not felt any factor limiting economic activity in July, were in services sector (41.6 %), but the smallest – in retail trade (27.0 %). In July, share of such enterprises in manufacturing comprised 29.3 %, in construction – 33.6 %. Insufficient demand was the most significant limiting factor in manufacturing (44.2 %), construction (27.7 %) as well as services sector (33.8 %). In construction and the services sector, its significance has increased, compared to April, while in manufacturing it has decreased. Insufficient demand as a limiting factor in retail trade was mentioned by 30.0 % of enterprises, which is 2.4 percentage points less than in April. For traders, competition in trade sector is more important, which in July was mentioned by 49.1 % of retailers. In July, the share of construction enterprises whose economic activity is limited by weather conditions is significantly higher than in previous years (16.0 %). As perceived by construction enterprises, in terms of unfavourable weather conditions, July of this year has been the worst in the sector since 2001, when the first business tendency survey in construction was conducted in Latvia.

Total economic uncertainty in July is reducing

Total Economic Uncertainty Index, which describes the predictability of socio-economic situation in the country, amounted to 11.8 in July, which, compared to the previous month, is 0.9 percentage points less. As perceived by enterprises, compared to the previous month, economic uncertainty has decreased in manufacturing and the services sector, but slightly increased in retail trade and construction.

In July 2025 economic sentiment indicator² in Latvia comprised 99.5, (99.1 – in the previous month). In turn, Employment Expectations Indicator, which has been volatile since the beginning of the year, has fallen to 98.2 in July, dropping below the long-term average value.

Methodological information:

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 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.

Media requests:
Public Relations Section
E-mail: media@csp.gov.lv
Phone: +371 27880666

More information about the data:
Ieva Vanaga
Short-Term Business Statistics Section
E-mail: Ieva.Vanaga@csp.gov.lv
Phone: +371 67366738