COVID-19 impact: business tendency indicators
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that in January 2023, business confidence indicators were positive in retail trade and services sector, while in manufacturing and construction, although having improved, business confidence indicators were still negative.
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.
Since August business environment in retail trade is improving each month
In January 2023 confidence indicator in retail trade, according to seasonally adjusted data, comprised 7.2. During the last half year this indicator increased each month and in January, compared to December, improved by 0.3 percentage points. According to seasonally unadjusted data, compared to December, confidence indicator has improved in all sub-sectors of retail trade, except of trade of motor vehicles. Business environment both in retail trade of food and of non-food products was positive in January (0.4 and 6.2, respectively). Improvement in business environment in these sectors was mostly affected by positive assessment of activity of enterprises during the last three months, which includes Christmas shopping period. In turn, business environment in retail trade of fuel, as well as sale of motor vehicle parts and accessories and repair of motor vehicles in January was negative (- 14.4 and - 2.1, respectively).
The share of retail sale enterprises feeling no factors restricting their economic activity comprised 24 % in January. Insufficient demand and lack of labour force as a restrictive factor was mentioned by 28 % and 17 % of retail sellers, respectively. Competition, which is always topical restrictive factor in retail trade, was mentioned by 42 % of retailers as a limiting factor in January. Already in December this indicator had reached its highest value since September 2021, but in January – it increased by one more percentage point. 20 % of respondents have indicated that their activity is affected by various other restrictive factors such as inflation, geopolitical situation and the resulting instability.
In services sector environment positive for already third consequent month
In the services sector, the seasonally adjusted confidence indicator in January 2023 was 4.3 and business environment of entrepreneurs, compared to December, has improved by 1.5 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, significant improvement was registered in several services sectors in January. For example, in accommodation, catering, rental and leasing services sector, as well in advertising services environment indicators, compared to December, have risen by more than 20 percentage points. In turn, in security, building maintenance and landscape architectural services sectors, as well as in programming and broadcasting activities business environment has worsened by 10 to 11 percentage points. In January environment in general improved in 22, but worsened – in 8 services sub-sectors. The most optimistic were entrepreneurs in motion picture, video and television programme production, sound recording and music publishing (29.9), but most pessimistic they were in air transport sector (- 35.2).
In January, 34 % of respondents of services sector have not felt any factor restricting economic activity. As compared to December, their share has grown by 1 percentage point. Activity of 20 % of entrepreneurs was significantly restricted by lack of labour force. In turn, insufficient demand as restrictive factor in January was indicated by 31 % of services sector enterprises, and their share, compared to the previous month, has risen by 6 percentage points, reaching the highest level since March 2021.
Business environment has slightly improved in construction
According to seasonally adjusted data, in January confidence indicator in construction comprised -11.4, which is an increase of 2.7 percentage points as compared to the previous month.
In January, compared to December, according to seasonally unadjusted data, the assessment regarding the expected changes of employment in the next three months has improved by 26.7 percentage points, as well as the assessment regarding the current overall level of orders has grown by 3.4 percentage points. Confidence indicator in January, compared to December, has grown in construction sub-sectors – in civil engineering by 21.9, in construction of buildings – by 14.0, but in specialized construction activities – by 4.0 percentage points.
Construction activity in January was mostly affected by bad weather conditions (indicated by 42.9 % of respondents) and insufficient demand (35.7 % of respondents). Lack of labour force as a restrictive factor was mentioned by 23.1 %, but lack of materials or equipment – 7.9 % of respondents. Impact of financial difficulties and other factors was indicated by 13.9 % and 7.3 % of respondents, respectively, (mainly rise in prices of building materials and war in Ukraine was mentioned). In turn, 16.0 % of entrepreneurs indicated that construction activity is not restricted by any factor.
In manufacturing business environment is below zero since March last year
According to seasonally adjusted data, in January confidence indicator in manufacturing comprised - 7.4. As compared to December, it has increased by 0.9 percentage points.
According to seasonally unadjusted data, compared to the previous month, confidence indicators have risen by their share in largest manufacturing sectors – manufacture of wood and of products of wood and cork (of 10.2 percentage points), manufacture of food products (5.3 percentage points) and manufacture of fabricated metal products, except machinery and equipment (6.5 percentage points).
Business environment has worsened in manufacture of furniture (of 3.5 percentage points), manufacture of electrical equipment (4.1 percentage point), as well as printing and reproduction of recorded media (4.6 percentage points).
In manufacturing confidence indicator is calculated in 23 sectors. Out of them, in January, compared to December, there was a rise of confidence indicator in 19 sectors, but in four sectors – a drop.
Insufficient demand and lack of labour force as a restrictive factor in manufacturing in January was mentioned by 44.4 % and 16.4 % of enterprises, respectively. In turn, lack of materials or equipment was indicated by 14.9 %, but financial difficulties – by 13.2 % of respondents. In January, 24.2 % of manufacturing enterprises have not felt any factor restricting economic activity.
In January 2023 economic sentiment indicator comprised 93.63, (92.7 – in the previous month). Economic sentiment indicator characterizes general socio-economic situation in the country during a certain period of time (month), and it is calculated by the European Commission, Directorate-General for Economic and Financial Affairs for all EU countries according to a common methodology, taking 15 various seasonally adjusted components included in industry, construction, retail trade and services sector, as well as in consumer confidence indicator4, as a basis.
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.
3 Value of the indicator exceeding 100 means that numeric characteristic of the economic situation exceeds long-term average value (2000–2021). While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.
4 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.
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More information on data:
Trade and Services Statistics Section
Phone: +371 67366738
Industrial and Construction Statistics Section
Phone: +371 67366739