RIGA, April 30 (LETA) - In April 2021, the business confidence indicator rose above zero in Latvia's manufacturing and retail trade sectors, with improved business confidence reported also the services and construction sectors, the Central Statistical Bureau (CSB) informed. 

According to seasonally adjusted data, in April confidence indicator in retail trade comprised 1.4. Last time, a positive value (2.2) was registered in October 2020. Compared to March, this indicator has grown by 14.2 percentage points.

The CSB noted that the business confidence index rose on much more positive forecasts of enterprise managers regarding activity of their enterprise in the next three months.

In April, the confidence indicator grew in both food and non-food retail trade, as well as in retail trade of fuel. Business environment has also improved in sale of motor vehicles, sale of motor vehicle parts and accessories, maintenance and repair of motor vehicles. After a break of several months, confidence of the majority of sectors mentioned has reached positive values, the most optimistic are fuel retailers (21.6). Confidence indicators still remain negative in retail trade of non-food products (-6.9) and sale of motor vehicles (-10.2).

In March 52 percent of retail sale enterprises indicated that their economic activity is significantly restricted by impact of Covid-19. Compared to March, this indicator has reduced by two percentage points. Also competition in trade sector (36 percent) and insufficient demand (24 percent) restricts successful activity of retail trade enterprises. In April, compared to March, share of enterprises in retail trade feeling no factors restricting economic activity has slightly increased. Their share comprised 14 percent.

In services sector in April 2021, according to seasonally adjusted data, confidence comprised -3.8. As compared to March, this indicator has grown by 14.9 percentage points. Business environment has improved in almost all services sectors, even though it is still negative in the largest part. Significant improvement was also registered in several services sectors, where, under the impact of COVID-19, it was especially low for a long time: in travel agency and tour operator sector (of 50.5 percentage points), accommodation (34.8 percentage points), but in catering and transport by air (26.4 and 27.8 percentage points, respectively).

In April, 29 percent of respondents of services sector have not felt any factor restricting economic activity, but 32 percent of respondents indicated that consequences from Covid-19 is a significant factor restricting successful economic activity. Also insufficient demand and financial difficulties was significant restrictive factor in services sector, which was indicated by 29 percent and 15 percent of entrepreneurs surveyed, respectively.

In April this year confidence indicator in construction, according to seasonally adjusted data, was -13.7, which, compared to the previous month, has risen by 7.4 percentage points. It was affected by a more optimistic forecasts of company managers regarding the expected development of employment in the next three months and more positive assessment regarding level of construction orders. Confidence indicator increased in all construction sectors – construction of buildings, civil engineering and specialized construction activities.

In April, the construction sector was mostly affected by bad insufficient demand – it was mentioned as a factor restricting economic activity of enterprises by 37 percent. The second significant factor was bad weather conditions, which was indicated by 33 percent of respondents. 13 percent of enterprises indicated negative impact of Covid-19. In April the number of enterprises having indicated lack of labor force and financial difficulties as a restrictive factor (both factors were indicated by 11 percent of construction enterprises) has slightly increased. In April 15 percent of respondents felt no factors restricting their economic activity.

In April confidence indicator in manufacturing has reached 3 (increase of 8.6 percentage points, compared to March), and it is positive for the first time since February 2020. It was affected by a more positive assessment of entrepreneurs of the current level of orders and significantly more optimistic forecasts of enterprise managers regarding activity of their enterprise in the next three months (the expected growth in production activity and economic activity). 

The largest increase of confidence indicator, as compared to the previous month, was in such manufacturing sectors as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of rubber and plastic products, manufacture of electrical equipment, manufacture of chemicals and chemical products, manufacture of food products, manufacture of wearing apparel and manufacture of non-metallic mineral products. In turn, there was a drop in manufacture of wood and of products of wood and cork, manufacture of textiles and manufacture of machinery and equipment n.e.c. As compared to the previous months, business environment has improved significantly regarding expected sale price of goods and development of employment in the following three months.

As compared to April 2020, assessment of entrepreneurs regarding the expected volume of export orders for the next three months (of which, assessment of export orders has increased significantly to member states both of the European Union (EU) and the Commonwealth of Independent States (CIS)) has grown by 37.7 percentage points (reaching 6.9 percentage points). Also competitiveness assessment of manufacturing during the last three months has improved both in domestic and external markets (in domestic market and external market in the EU countries, reaching positive values) and total volume of orders of enterprises during the last three months.

In April 2021, the economic sentiment indicator comprised 101.73, which is 11 points more than in March. The 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.