After a longer break, the Economic Sentiment Indicator in October exceeded the long-term average value

Data of business tendency surveys¹ carried out by the Central Statistical Bureau (CSB) shows that in October 2025, the overall business and consumer environment in economy improved. This is shown by the Economic Sentiment Indicator, which reflects the perception of economic development and expectations for the near term.

In October 2025 Economic Sentiment Indicator² in Latvia comprised 100.8 (98.7 – in the previous month). For the first time since February 2022, it has exceeded the long-term average value. The Employment Expectations Indicator, which has been fluctuating since the beginning of the year, also increased in October, reaching 100.7.

In October this year, compared with the previous month, business environment improved in construction, retail trade, and the services sector, but slightly deteriorated in manufacturing.

Retail trade reported a more favourable business environment for already four consecutive months

In October, the Business Confidence Indicator in retail trade was 5.1 (seasonally adjusted data), rising by 0.2 percentage points compared with the previous month.

In autumn, the retail trade typically experiences a seasonal decline in business environment; despite the Christmas shopping period, the environment usually reaches its lowest levels at the end of the year. In October, the seasonally unadjusted confidence indicators in both food and non-food retail trade decreased; however, they remained positive (2.8 and 6.3, respectively). The most pronounced decline in environment (by 7.7 percentage points) compared with September was recorded in sale of motor vehicles, where the confidence indicator dropped below zero. A negative environment typically low to the season was also observed in retail sale of fuel (- 4.1). In contrast, after a pronounced decline during the summer months, confidence indicator in sale of motor vehicle parts and accessories and in repair of motor vehicles has been gradually improving and has remained positive for the second consecutive month (6.3).

In most sub-sectors of the services sector environment is positive.

In the services sector, the seasonally adjusted confidence indicator in October was 2.4, and business environment of entrepreneurs, compared with September, has improved by 0.7 percentage points.

According to seasonally unadjusted data, among the more optimistic in October are service providers in the insurance (30.4) and financial services (15.4). The confidence indicator is also notably high in labour recruitment and provision of personnel (22.2), where, after a brief decline in the previous month, business environment has risen significantly again, confirming that in this sector it has been convincingly positive since the beginning of 2025. In several services sub-sectors, such as air transport (- 38.9) and catering (- 10.0), the low confidence indicators are largely explained by seasonality. However, in the travel agency and tour operator sector, environment in October is significantly worse (- 13.6) than is usual for this time of year. Environment has also deteriorated sharply in the small veterinary services sector, where the confidence indicator has fallen to -11.1.

In construction, the highest confidence indicator in the last 6.5 years

Typically low confidence indicator in construction, according to seasonally adjusted data, was - 4.0 in October. As compared with September, it has grown by 2.8 percentage points and reached its highest level since May 2019.

In construction, a seasonal decline in business environment is typical in the autumn, reaching its lowest values in November and December. Also this year, according to seasonally unadjusted data, confidence indicators, compared with the previous month, have decreased and are negative in all three construction sub-sectors: construction of buildings (- 11.9), specialized construction activities (- 15.0), and civil engineering (- 11.2). The decline in the confidence indicator is influenced by negative forecast of entrepreneurs regarding the expected changes of employment in the coming months. However, the business tendency indicator for the level of construction orders – which is the second component of the confidence indicator in construction – although still negative, improved by 0.2 percentage points in October compared with September, reaching its highest value since May this year.

Business environment in manufacturing has stabilized

Confidence indicator in manufacturing, according to seasonally adjusted data, comprised - 4.2 in October. As compared with September, it has dropped by 0.8 percentage points. Seasonally unadjusted data show that out of 23 manufacturing sectors surveyed in October, compared with the previous month, in 7 sectors business environment has improved, in 14 – worsened, but in two hasn’t changed.

In October compared with September, according to seasonally unadjusted data, business environment has improved in the following by their share the most significant manufacturing sectors: manufacture of electrical equipment (by 6.2 percentage points), manufacture of rubber and plastic (0.7 percentage points) as well as manufacture of computer, electronic and optical products (0.1 percentage point). In turn, business environment worsened in manufacture of wood and of products of wood and cork (by 1.5 percentage points), manufacture of fabricated metal products, except machinery and equipment (2.2 percentage points). Since July, a downward trend in confidence indicators has also been observed in both manufacture of food products and manufacture of beverages (compared with September, a decrease of 2.3 and 5.1 percentage points, respectively). In manufacture of metal products, where business environment had been positive since January this year, marking it as the manufacturing sector with the longest streak of positive business environment assessments (10 consecutive months), environment in October has deteriorated sharply by 12.4 percentage points, falling to a negative indicator of - 6.2. Thus, in October, the sub-sector that remained the most consistently optimistic was manufacture of machinery and equipment n.e.c.

Insufficient demand mostly limits economic activity in manufacturing

The largest share of enterprises, who have not felt any factor limiting economic activity in October, were in services sector (38.7 %), but the smallest – in retail trade (26.0 %). In October, share of such enterprises in manufacturing comprised 28.9 %, in construction – 30.2 %. In manufacturing, construction and services sector the most significant limiting factor in October was insufficient demand (42.0 %, 24.4 % and 32.0 %, respectively), but in all three economic activities the significance of this limiting factor has decreased compared with July. Insufficient demand as a limiting factor in retail trade was mentioned by 36.0 % of enterprises, which is 6.0 percentage points more than in July. However, competition in trade sector is more important for retailers, which was mentioned by 49.5 % in October.

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