Foreign demand and exports in June continued to promote growth in the processing industry

According to the data of the Central Statistics Agency, the production output of the processing industry in June (excluding the seasonal influence) increased 0.2% over May and 13.8% year-on-year. A substantial increase was observed also in the second quarter: by 7.9% over the quarter (according to seasonally adjusted data) and 12.0% year-on-year. This suggests that the impact of the growth in the industry on GDP changes will be greater than in the first quarter.

Compared to the previous month, the production output in June increased in several branches, with the greatest growth in the manufacturing of electrical appliances, computers and electronics, readymade metal products, wood pulp and wooden products as well as textile products.

The industrial output has grown substantially in several branches also over the year, including the manufacturing of electrical appliances, computers and electronics, chemical substances and products, wood pulp and wooden products, textile products, as well as metals and readymade metal products.

The recovery of the global economy along with the rise in the competitiveness of Latvian producers has been promoting the development of our processing industry and entrepreneur optimism for several months already. The domestic demand is also recovering gradually as evidenced by the positive dynamics of turnover and indices of new orders in some branches, the development of retail trade, and data on consumer moods. Judging by the results of entrepreneur surveys published by the European Commission, the Latvian industry confidence indicator has shown stable growth and in June it was already 13 percentage points higher than at the beginning of the year and 23 percentage points higher than a year ago.

The assessment of July export orders as well as selling prices of production continued to improve in July. With regard to the third quarter, the entrepreneur assessment of the level of the use of manufacturing capacities is also growing. Thus we can expect production growth supported by foreign demand and competitiveness in the third quarter as well. It must be noted, however, that the entrepreneur assessment of the economic activity expected in a month has worsened somewhat, apparently because of the still unreliable domestic demand. The month-to-month development of the processing industry may therefore remain uneven for the time being.