Press Release

In June, business environment is improving

Data of business tendency surveys[1] carried out by the Central Statistical Bureau (CSB) show that, as compared to May, in June 2020, confidence indicators have improved, however, they still are 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.

According to seasonally adjusted data, in June confidence indicator in retail sale was 14.2, which is an increase of 8.3 percentage points as compared to May. 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 June, 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 38.1 % of respondents. However, impact of COVID-19 on the business in retail trade sector (36.6 %) and insufficient demand (35.5 %) lags behind just slightly. In June, 18.6 % of retail sellers have not felt any factor restricting economic activity.

In services sector in June 2020, according to seasonally adjusted data, confidence comprised -30.4. As compared to May, this indicators has grown by 7.0 percentage points. Confidence indicators in June still were negative in all services sectors, but the lowest, the same as in previous month, they were in accommodation, catering and travel agency and tour operator sectors. Comparatively optimistic assessment was provided by company managers and leading specialists in computer programming, veterinary, legal and accounting, as well as financial services sectors.

If in May 2020, 50.8 % of services sector enterprises indicated emergency situation as significant obstruction for successful economic activity, in June, as overall business situation in services sector slightly improved, only 39.9 % mentioned impact of COVID-19 as disruptive. Almost the same as a year ago enterprises feel insufficient demand (32.2 %), but lack of labour force, which during the last months has lost its importance, is mentioned as a restrictive factor only by 3.6 % of respondents. In June, 30.5 % of respondents of services sector have not felt any factor restricting economic activity.

In June of this year confidence indicator in construction, according to seasonally adjusted data, comprised -24.3 and, compared to the previous month, increased by 8.8 percentage points, which was affected by more positive assessment of entrepreneurs regarding the level of construction orders and optimistic assessment of the expected development of employment in the next three months. Confidence indicator rose in all construction sectors – construction of buildings, civil engineering and specialized construction activities.

As compared to May, the number of respondents indicating “insufficient demand” (31 % of construction enterprises surveyed) and impact of COVID-19 (13 % of respondents) out of all factors affecting construction sector has reduced. But the number of enterprises that mentioned lack of labour force as restrictive factor increased by 8 % (15 % of respondents). In June, economic activity of 32 % of construction enterprises was not affected by any restrictive factors.

In June confidence indicator in manufacturing was –12.1 (2.3 percentage points more than in May this year), which was affected by significantly more optimistic forecasts of enterprise managers regarding activity of their enterprise in the next three months (the expected production activity, total economic activity) and slightly more positive assessment of current level of orders. Even though in June confidence indicators still are negative, compared to the previous month, they have increased in majority of manufacturing sectors. The largest growth of confidence indicator was in manufacture of beverages (of 16.6 percentage points), manufacture of computer, electronic and optical products (15 percentage points), manufacture of furniture and manufacture of wearing apparel. While confidence indicator decreased in repair and installation of machinery and equipment, manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of motor vehicles, trailers and semi-trailers and manufacture of textiles. As compared to May of this year, 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 reduced slightly (by 2 percentage points), but assessment of the expected volume of export orders for the next three months has increased significantly (by 10.3 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 May, also competitiveness assessment of manufacturing enterprises during the last three months has slightly improved both in external and domestic markets. As compared to the previous period, the number of enterprises indicating “insufficient demand” (43 % of all respondents) and impact of COVID-19 (15 % of manufacturing enterprises surveyed) out of all factors affecting production in enterprise has decreased. In June, activity of 33 % of manufacturing enterprises was not affected by any restrictive factors.

In June 2020 economic sentiment indicator comprised 83.7[3], which is 4.8 points more than in May. 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.

Next press release on confidence indicators in July is planned to be released on July 31. More information on confidence indicators is available in the CSB database section “Business indicators”.

 

Media requests:
Communication Section:
E-mail: media@csb.gov.lv
Phone: +371 67366621, +371 27880666

More information on the data:
Ieva Vanaga
Trade and Services Statistics Section
E-mail: Ieva.Vanaga@csb.gov.lv
Phone: +371 67366738

Madara Liepiņa
Industrial and Construction Statistics Section
E-mail: Madara.Liepina@csb.gov.lv
Phone: +371 67366953

 

[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. It must be taken into account that business survey data on June were collected from 1-18 June, therefore, part of enterprises has given their assessment of situation at the beginning of the month when emergency situation in the country was not lifted yet.

[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   2019. While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.

 

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