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Business confidence indicator continued to improve in July - statistics
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    Business confidence indicator continued to improve in July - statistics

    RIGA, July 31 (LETA) - Data of business tendency survey carried out by the Central Statistical Bureau (CSB) show that, compared to June, in July 2020, confidence indicators have improved, however, they still are negative, LETA learned from CSB

    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.

    In retail trade confidence indicator has risen by 8.6 percentage points

    According to seasonally adjusted data, in July confidence indicator in retail sale was -5.6, which is an increase of 8.6 percentage points as compared to June. As situation in business improved, confidence indicators in retail sale of food products and fuel have already reached positive values, but in retail sale of non-food goods, as well as in trade of motor vehicles, motorcycles and their parts and accessories confidence indicators still are negative.

    In July, main factor restricting economic activity in retail trade, the same as before outbreak of COVID-19, still is competition in trade sector that was mentioned by 41.2 percent of respondents. It is followed by insufficient demand (30.2 percent) and impact of COVID-19 on the business in retail trade sector (27 percent). The last factor mentioned was marked by two times less respondents than in April. In July no factors restricting economic activity were felt by 22.7 percent of retail sellers.

    In services sector in July 2020, according to seasonally adjusted data, confidence comprised -24.6. As compared to June, this indicators has grown by 5.8 percentage points. Confidence indicators in July still are negative in almost all services sectors, reaching positive values solely in building maintenance and landscape architectural services sectors, computer programming, as well as veterinary services. The same as in previous month, the lowest indicators were in air transport, accommodation, catering, as well as travel agency and tour operator sectors.

    In July, 31.5 percent of respondents of services sector have not felt any factor restricting economic activity, but 33.9 percent of respondents still indicated that consequences from COVID-19 is a significant factor restricting successful economic activity. Slightly larger is the share of enterprises whose activity is significantly restricted by insufficient demand (34.5 percent). This indicator is 9 percentage points higher than in July last year. Lack of labor force, which during the last months has lost its importance, is mentioned as a restrictive factor only by 5 percent of respondents.

    In construction confidence indicator has increased by 1.4 percentage points

    According to seasonally adjusted data, in July this year confidence indicator in construction comprised -22.9. As compared to the previous month, the indicator has grown by 1.4 percentage points, which was affected by a more positive assessment of entrepreneurs regarding the level of construction orders, however, assessment of the expected development of employment in the next three months was less optimistic. Confidence indicator rose in specialized construction activities, but fell in civil engineering. In construction of buildings confidence remained at the level of the previous month.

    As compared to June, share of enterprises indicating insufficient demand (39 percent of construction enterprises surveyed) out of all factors affecting construction volume has increased, but the number of enterprises indicating impact of COVID-19 (8 percent of respondents) has reduced significantly. But the number of enterprises that mentioned lack of labor force as restrictive factor has remained the same (15 percent of respondents). In July, economic activity of 30 percent of construction enterprises was not affected by any restrictive factor. More than a year ago construction enterprises felt insufficient demand (of 18 percent), but less – lack of labor force and impact of weather (14 percent and 3 percent, respectively).

    In manufacturing confidence indicator in July comprised -7 (5.1 percentage point more than in June this year), which was affected by more positive assessment of current level of orders and optimistic forecasts of enterprise managers regarding activity of their enterprise in the next three months (the expected production activity, total economic activity). In July, confidence indicators still are negative in almost all manufacturing sectors (except of manufacture of chemicals and chemical products and manufacture of rubber and plastics products), however, compared to the previous month, they have improved. The largest increase of confidence indicator, as compared to June, was in manufacture of textiles, printing and reproduction of recorded media, repair and installation of machinery and equipment and manufacture of computer, electronic and optical products. In July, business environment improved both regarding expected sale price of goods and assessment of the expected development of employment in the following months.

    As compared to the previous month, assessment of enterprises on the total volume of all orders during the last three months has increased (by 10.9 percentage points) and assessment of the expected volume of export orders for the next three months (by 7.6 percentage points), of which assessment of export orders to member states both of the European Union (EU) and of the Commonwealth of Independent States (CIS). As compared to June, also competitiveness assessment of manufacturing enterprises during the last three months continued to improve both in external and domestic markets.

    In July, activity of 38 percent of manufacturing enterprises surveyed was not affected by any restrictive factor. Even though production in manufacturing enterprises still is mostly limited by insufficient demand (mentioned by 37 percent of respondents), impact of COVID-19 (13 percent of manufacturing enterprises surveyed) and financial difficulties (9 percent of enterprises), compared to June, impact of these factors has diminished. However, compared to the corresponding month of the previous year, importance of lack of labor force has reduced significantly (by 19 percent), which in July of this year was indicated by 8 percent of respondents.

    In July 2020 economic sentiment indicator comprised 87.63, which is 3.9 points more than in June. 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 indicator, as a basis.

    • Published: 31.07.2020 13:56
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