Business Business sentiment indicators in Latvia improved in June

Business sentiment indicators in Latvia improved in June

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The Statistics Department mentioned that business sentiment indicators describe the general situation in the sector and are obtained by conducting business surveys in the industrial, construction, retail trade and services sectors. If the indicator is above zero, there is a positive business environment, if below zero – a negative mood of entrepreneurs. According to seasonally adjusted data, the retail sentiment indicator in June was -14.2, which is an increase of 8.3 percentage points compared to May.

In the food and fuel retail trade, sentiment indicators have already reached positive values ​​as the economic situation improves, but in the non-food retail trade, as well as in the sale of cars, motorcycles, parts and accessories, sentiment indicators remain negative.

In June, the main factor limiting economic activity in retail trade, as in the period before the Covid-19 outbreak, was still competition in the retail sector, which was noted by 38.1% of respondents. However, the impact of Covid-19 on business in the retail sector (36.6%) and insufficient demand (35.5%) lag only slightly behind. At the same time, 18.6% of retailers did not experience any factors limiting economic activity in June.

In the services sector in June 2020, according to seasonally adjusted data, the mood was -30.4. Compared to May, this indicator has increased by 7.0 percentage points.

Sentiment indicators were still negative in all service sectors in June, but the lowest, as in the previous month, were in the accommodation, food, travel agency and tour operator sectors. Relatively optimistic assessments have been provided by company managers and leading specialists in the fields of computer programming, veterinary, legal and accounting, as well as financial services.

If in May 2020 50.8% of companies in the service sector indicated the emergency situation as a significant obstacle to successful economic activity, then in June, when the general economic situation in the service sector slightly improved, only 39.9% mentioned the impact of Covid-19 as an obstacle.

To the same extent as a year ago, companies felt insufficient demand in June this year (32.2%), but labor shortages, which have significantly lost their importance in recent months, were cited as a limiting factor by 3.6% of respondents. At the same time, 30.5% of respondents in the service sector in June did not feel any factors restricting economic activity.

According to seasonally adjusted data, the sentiment indicator in construction was -24.3 in June this year, which is 8.8 percentage points higher than in the previous month, which was influenced by a more positive assessment of entrepreneurs about the level of construction orders and an optimistic assessment of expected employment in the next three months. . The sentiment indicator increased in all construction sectors: building construction, civil engineering and specialized construction.

Compared to May, the number of respondents who indicated “insufficient demand” (31% of surveyed construction companies) and the impact of Covid-19 (13% of respondents) out of all factors influencing the volume of construction. On the other hand, the number of companies that have noted the lack of labor force as a limiting factor has increased (15% of respondents). At the same time, 32% of the surveyed construction companies’ economic activity in June was not affected by any restrictive factors.

Manufacturing sentiment was -12.1 in June, up 2.3 percentage points from May, driven by more optimistic business leaders’ forecasts for the company’s activity over the next three months (expected manufacturing activity, total economic activity) and a slightly more positive current order level. assessment.

Although sentiment remained negative in June, it has increased month-on-month in most manufacturing sectors. Among them, the largest increase in sentiment was in the manufacture of beverages (by 16.6 percentage points), the manufacture of computer, electronic and optical products (by 15 percentage points), and the manufacture of furniture and clothing. At the same time, the sentiment indicator decreased in the repair and installation of machinery and equipment, in the manufacture of basic pharmaceutical products and pharmaceutical preparations, in the manufacture of motor vehicles, trailers and semi-trailers and in the manufacture of textiles.

Compared to May, entrepreneurs’ sentiment improved both in terms of the expected sales price of goods and the expected development of employment in the coming months.

Compared to the previous month, the companies’ assessment of the total volume of orders in the last three months (by two percentage points) has slightly decreased, but the assessment of the expected volume of export orders in the next three months (by 10.3 percentage points) has significantly increased, including the assessment of export orders to the European Union. (EU) and to the CIS countries.

Compared to May, the assessment of the competitiveness of manufacturing companies has slightly improved in the last three months, both in the domestic and foreign markets.

Compared to the previous period, the number of companies that reported “insufficient demand” (43% of all respondents) and the impact of Covid-19 (15% of the surveyed manufacturing companies) out of all factors influencing production in the company. At the same time, 33% of the surveyed manufacturing enterprises in June were not affected by any factors limiting production.

In June 2020, the economic sentiment indicator was 83.73, which is 4.8 points more than in May. The economic sentiment indicator describes the overall socio-economic situation in a country over a period of time and is calculated for all EU countries according to a common methodology by the European Commission’s Directorate-General for Economic and Financial Affairs, based on 15 different seasonally adjusted industrial, construction, retail and service sectors and consumer sentiment indicators. components included.

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