In April, the mood of entrepreneurs is positive in retail trade and the service sector – Economy, finance

Riga, 30.04.2024. The mood of entrepreneurs in April 2024 in retail trade and the service sector was positive, but negative in the construction and manufacturing industry, according to the data of the conjuncture surveys1 conducted by the Central Statistics Office (CSB).

The mood of entrepreneurs in retail trade is positive

In April, the confidence index in retail trade according to seasonally adjusted data was 2.1, and compared to March, it increased by 0.2 percentage points. According to seasonally unadjusted data, the mood of entrepreneurs in both food and non-food retail was positive (10.5 and 6.5, respectively). The fastest increase in the confidence index (by 18.2 percentage points), compared to March, was in fuel retail (11.7). Compared to March, the mood of businessmen in car sales has improved by 8.2 percentage points (1.1), while in the sale of their parts and accessories, as well as their repair, the confidence indicator has increased by 1.6 percentage points and the mood of businessmen is characteristically optimistic for the season (13, 8).

In the services sector, the mood is slightly deteriorating

In the services sector, the confidence index was 0.9 in April according to seasonally adjusted data, and business sentiment has worsened by 1.7 percentage points compared to March. According to seasonally unadjusted data, the most optimistic in April were those performing administrative activities of offices and other auxiliary activities of companies (21.2), providers of legal and accounting services (14.6). On the other hand, the lowest sentiment indicators in April were in postal and courier services (- 29.2), production of cinema and video films, television programs and sound recordings (- 16.7), as well as land transport services (- 11.6).

In construction, the mood of entrepreneurs is steadily negative

In construction, according to seasonally adjusted data, the confidence index in April was – 14.7, which, compared to the previous month, has decreased by 3.6 percentage points. The pessimistic mood is related to the level of orders for construction works, which was assessed as insufficient by 33.4% of construction contractors in April. In April, compared to March, the confidence index in building construction increased by 1.6 percentage points, while in engineering construction and specialized construction works it decreased by 3.1 and 0.6 percentage points, respectively.

The mood in the manufacturing industry is still negative

In the manufacturing industry, according to seasonally adjusted data, the confidence index in April was – 5.9. Compared to March, it worsened by 0.8 percentage points. In April, compared to March, according to seasonally unadjusted data, business sentiment increased in the following sectors of the manufacturing industry that are significant in terms of their share: in the production of wood, wood and cork products (by 2.5 percentage points), in the production of metal products, excluding machinery and equipment, (by 2.3 percentage points), as well as in the production of computers, electronic and optical equipment (by 5.4 percentage points). On the other hand, the mood worsened in the production of food products (by 2.7 percentage points), in the production of chemicals and chemical products (by 1.8 percentage points) and in the production of non-metallic mineral products (by 4 percentage points).

Insufficient demand limits entrepreneurs in industry and construction the most

The largest share of companies that did not experience any limiting factors of economic activity in April was in the service sector (41.4%), and the smallest – in construction (23.0%). In both manufacturing and construction, the dominant limiting factor in April was insufficient demand (47.9% and 37.0%, respectively), and in retail – competition in its trade sector (50.0%). Labor shortages (from 12.7% in services to 17.2% in construction) and financial difficulties (from 7.4% in services to 13% in construction) were less limiting. The weather had a negative impact on 28.3% of construction companies.

in April 2024 an indicator of economic sentiment² In Latvia it was 98.2 (previous month 98.0), on the other hand an indicator of employment change expectationswhich was above the long-term average value (100) in the previous three months, decreased to 98.7.

Economic uncertainty in business decreased slightly in April

The indicator of economic uncertainty, which characterizes the predictability of the socioeconomic situation in the country, was 17.4 in April (17.1 in the previous month). In April, compared to March, uncertainty decreased in all business areas, but remained higher in construction and manufacturing (28.9 and 27.3, respectively). In retail trade, the uncertainty index decreased to 23.5, and in the service sector to 8.3. The general indicator of economic uncertainty is also affected by the consumer³ rating, which, unlike business sentiment, has increased by 9.2 percentage points compared to March and is again positive (5.5).

Labor force accumulation rate characterizes the proportion of entrepreneurs who, anticipating a decrease in company activity or demand for goods or services in the near future, nevertheless do not plan to reduce the number of employees. In April, the value of this indicator was 7.8, which is 0.2 percentage points less than in March.

More information on economic indicators is available in the “Business forecasts (economic indicators)” section of the official statistics portal.

¹Business cycle surveys in industry, construction, retail trade and the service sector are conducted monthly by the CSB in accordance with the methodology of the EU’s Joint Harmonized Cycle and Consumer Survey Program with co-financing from the European Commission.

²The composite indicators of economic sentiment, expectations of employment changes, economic uncertainty and labor accumulation are calculated by the Directorate General of Economic and Financial Affairs of the European Commission (ECFIN) using the results of the conjuncture surveys conducted by the member states, according to a common methodology.

³The consumer situation survey is conducted every month in accordance with the methodology of the EU’s Joint Harmonized Situation and Consumer Survey Program with the co-financing of the European Commission by the company “Latvijas Fakti”.

Central Statistical Office