In August, business environment became more favourable in retail trade and services

According to Central Statistical Bureau business tendency surveys¹, the business environment in retail trade was assessed more positively in August 2025, standing at its highest level in the past seven months. The business environment remains positive in services sector, whereas in manufacturing, after several months of improvement since the start of the year, it weakened slightly. In construction, the business environment deteriorated, constrained by less favourable weather conditions than usual in summer.

Retail trade reported a more favourable business environment

In August, the Business Confidence Indicator in retail trade was 3.2 (seasonally adjusted data), rising by 1.5 percentage points compared to July.

Seasonal improvements in the business environment are typical for retail trade in spring, with the highest values of the year usually recorded in May and June. Therefore, the decline of the seasonally unadjusted confidence indicator in August in some retail trade sub-sectors can largely be explained by seasonality.

Month-on-month, the business confidence in retail sale of food deteriorated by 4.1 percentage points, and in retail sale of automotive fuel by 7.3 percentage points, while in retail sale of non-food products it increased by 3.3 percentage points. After the confidence indicator in sale of motor vehicle parts and accessories had dropped sharply to a negative value in July (−10.8), in August business environment in this sector improved (up by 6.0 percentage points). By contrast, the confidence indicator in sale of motor vehicles fell by 4.3 percentage points month-on-month yet remained positive at 6.8.

Confidence indicator in services sector remains positive

The services sector recorded a confidence indicator of 0.3 in August, with the business environment improving by 0.2 percentage points compared with July.

The most positive views came from service providers in sub-sectors that usually expand in summer, where the confidence indicator stood at 20.0 in accommodation, 27.3 in rental and leasing activities, and 22.5 in travel agency and tour operator activities. Insurance has also ranked among the most optimistic industries for an extended period, at 20.0. By contrast, the lowest confidence indicators were recorded in motion picture, video and television programme production activities (−14.4), land transport (−10.1), as well as security and investigation activities (−10.8).

Overall, out of 30 surveyed services sub-sectors, 18 reported a positive business environment, 10 a negative one, while in 2 the confidence indicator was neutral (zero).

Unfavourable weather restricts construction activity more than usual in summer

In construction, the typically low confidence indicator was −9.8 in August (seasonally adjusted data), down by 0.5 percentage points compared with July.

Reflecting the sector’s seasonality, the business environment usually reaches its highest values in April or May and then declines in the following months. This year as well, seasonally unadjusted month-on-month data show that confidence indicators fell and remained negative in all three construction sub-sectors: −10.5 in construction of buildings, −8.3 in specialised construction activities, and −1.9 in civil engineering.

In August, 19.7 % of construction enterprises reported adverse weather conditions as a factor limiting their activity, making it the most unfavourable month for the sector in terms of weather among all summer months in the past 25 years. Weather had the greatest impact on civil engineering, where 25.2 % of enterprises reported it as a limiting factor, while in specialised construction activities (20.4 %) and construction of buildings (14.5 %) the effect was less pronounced.

June and July were also unusually unfavourable, making this summer especially difficult for construction, with 17.1 % of enterprises reporting weather as a factor restricting their activity. The most unfavourable summer for construction so far was in 2017, with 12.2 % of enterprises citing weather as a restricting factor, whereas the most favourable was in 2001, with just 1.0 %.

Business environment in manufacturing deteriorates slightly

In manufacturing, the seasonally adjusted confidence indicator was −5.1 in August, having decreased by 1.8 percentage points compared with July.

Seasonally unadjusted data show that, out of 23 surveyed manufacturing sub-sectors, the business environment month-on-month improved in 8 sub-sectors, deteriorated in 13, and remained unchanged in 2.

According to seasonally unadjusted month-on-month data, business environment improved in the following major manufacturing sub-sectors: manufacture of fabricated metal products, except machinery and equipment (up by 0.9 percentage points), manufacture of furniture (up by 2.1 percentage points), and manufacture of machinery and equipment not elsewhere classified (up by 6.5 percentage points). By contrast, it fell in manufacture of wood and of products of wood and cork, except furniture (down by 1.8 percentage points), manufacture of computer, electronic and optical products (down by 3.4 percentage points) and manufacture of electrical equipment (down by 5.3 percentage points). For the second consecutive month, the business environment in manufacture of beverages deteriorated significantly. This sub-sector was among the most optimistic in manufacturing in the first half of the year, but in August the confidence indicator in it declined by 7.8 percentage points, turning negative at −16.7.

Overall economic uncertainty intensifies in August

The overall Economic Uncertainty Index, which reflects the predictability of the socio-economic situation in the country, was 13.6 in August, up by 1.8 percentage points compared with July.

The increase in the indicator was mainly driven by volatile consumer sentiment². According to business assessments, economic uncertainty decreased month-on-month in construction and services but increased slightly in retail trade and manufacturing.

In August 2025, the Economic Sentiment Indicator³ in Latvia was 97.2 (99.5 in July). Having varied since the start of the year, the Employment Expectations Indicator remained stable month-on-month at 98.2.

Methodological information

¹ Central Statistical Bureau carries out monthly business surveys in manufacturing, construction, retail trade and services in line with the methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys, co-financed by the European Commission.

² The monthly consumer survey is carried out by Latvijas Fakti under the methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys, co-financed by the European Commission.

³ The Directorate-General for Economic and Financial Affairs (ECFIN) calculates the Economic Sentiment and Employment Expectations Composite Indicators using the results from business tendency surveys conducted by the Member States according to a common methodology.

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