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Central Statistical Bureau releases improved business environment in Latvia – Baltic News Network

Central Statistical Bureau releases improved business environment in Latvia – Baltic News Network

In January 2022, business confidence indicator were positive in the retail trade and services sector. However, in industry and construction, despite improvements, they were still negative.

Business confidence indicators represent the general sector’s situation. They are obtained through business surveys in construction, retail trade, and services. The indicator above zero indicates a positive business environment, while below zero indicates a negative business environment, according to data from the Central Statistical Bureau.

After a period of three months at the end 2021, when retail confidence indicators were negative, the retail confidence indicator rose to a positive 1.3 in January 2022. This indicator rose 2.5 percentage points in comparison to December. Comparable to December, business confidence indicators improved in retailing non-food products, trade and repair of motor vehicles and parts, and retail fuel trade. With a confidence score at -12.5 in January, entrepreneurs in food retail were most pessimistic, down 4.3 percentages compared with December.

In January, 14% of retailers said that they did not feel any constraints to their business activities. This is a decrease of two percentage points compared to December. 11 % of retailers indicated that their business activities were severely restricted by financial difficulties. This figure was at its highest in two years in January. However, 44 % of respondents noted the impact of Covid-19 as a significant factor limiting economy activity. This indicator has not changed in any significant way compared to December. Although respondents mentioned rising energy costs and other logistical problems as obstacles to economic activity in January, this proportion is still very small.

In the services sector, the seasonally adjusted optimism indicator in January 2022 was positive (4.3), while the business environment for entrepreneurs improved by 5.0 percentage point compared to December. As is usual, confidence indicators can vary widely between service sectors. The trends in these indicators also depend on the sector’s specificities, seasonal impact, and how severe the Covid-19 pandemic has affected the sector.

Entrepreneurs in the catering and accommodation sector were the most pessimistic in January. Their confidence indicators were -41.4 & -56.7, respectively.

The indicator rose by 23.6 percentage point in accommodation compared to December. However, it fell by 2.4 percentage point in the catering sector. Security and investigation services was the third most pessimistic sector in January. The confidence indicator fell to -56.7 during the year. The most optimistic business environment for January was found among financial providers (22.0) or insurance (40.7), as well as entrepreneurs in legal and accounting (20.0) and computer programming (20.4). The confidence indicator in services fell 19.1 percentage points to 16.7 in January for the postal and courier sector. This sector was the most valuable in December. Overall, the January business environment was positive for 16 sub-sectors of service and negative for 12. In two sectors, there was no confidence indicator.

29 % of respondents to the services sector reported that they didn’t experience any factors restricting their economic activity in December. This is a two percentage point increase over November. 28 % of respondents indicated that Covid-19 was a significant limiting factor to their business activities. This is the same percentage as November.

The seasonally adjusted construction confidence index for January is -5.6. This is 7.7 percentage point higher than the previous month. The indicator is still negative but it has reached its highest level since June 2019, when it was at -4.4. Comparatively to December, the entrepreneurs’ perceptions of the level of construction orders increased slightly in January. Also, their expectations for the future were more optimistic. In all construction sectors, including construction of buildings, civil engineering, and specialized construction activities, the confidence indicator rose.

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Bad weather conditions were most detrimental to the construction industry in January (reported by 46 % of respondents), two percentage points higher than in January last years. 31 % of respondents indicated that insufficient demand was the second most common factor limiting business activity. This is up two percentage points from the previous month. Twelve percent of respondents reported that the percentage of enterprises whose financial difficulties have affected their economic activity fell by two points. 7 % of enterprises reported the negative effects of Covid-19 in January. This is one percentage point less than December. 18% of surveyed construction companies were not affected in January by any limiting factors (an increase of six percentage point compared to the previous months).

The manufacturing confidence indicator rose by 0.7 percentage points between December and January, to -1.0. This was due to a more positive assessment of the current level of orders by company managers and optimistic forecasts for their company’s activity in the next three months (expected increase in production activity, increase in economic activity). The largest increase in confidence indicators, compared to the previous months, was recorded in the manufacturing industries of manufacture of other motor vehicle, repair and installing machinery and equipment, manufacture and paper and paper products. A decrease was also registered in other manufacturing and the manufacture and installation of electrical equipment.

Comparable to December, the number respondents who indicated insufficient demand as a factor limiting production have slightly decreased while the impact of labour shortages (both factors were indicated 28 % of entrepreneurs surveyed). In January, 10 % of surveyed businesses indicated that Covid-19 had an impact on their business (unchanged from the previous months). Other factors that have impacted production include rising raw materials and electricity prices. In January, 30 % of the surveyed manufacturers were not affected by any limiting factors.

The January 2022 economic mood indicator was 99.3, compared to 99.9 in the previous month. The economic sentiment indicator is a measure of the country’s socio-economic status over a given period of time (month). It is calculated by the European Commission Directorate-General for Economic and Financial Affairs for all EU Countries using a common methodology. It takes 15 components that are seasonally adjusted and include retail trade, construction, and consumer confidence indicator as a base. Pessimistic consumer attitudes were the most important contributor to January’s decline in the monthly economic mood indicator.

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