A small drop in processing industry also in February

The processing industry output in February diminished 2.6% over the previous month according to seasonally adjusted data, albeit the evaluation of the situation by entrepreneurs improved. The reduction was the result of an ever diminishing domestic demand, which continued to have a substantial impact on the development of certain sectors.

According to the results of situation surveys (which, on the basis of data from entrepreneur surveys conducted by the Central Statistics Department are gathered and published by the European Commission), entrepreneurs gave a more optimistic evaluation to the situation in the processing industry in February than in January. Moreover, it was not only the current situation in manufacturing that received a substantially more positive assessment but also the development of orders: in this respect, the evaluation improvement has been highest since the trends turned to positive, i.e. since the end of the previous year.

The rise in foreign demand along with an improvement in the competitiveness of Latvian enterprises fostered important upward trends in such branches as the manufacturing of chemical substances and products, pharmaceuticals, computers and electronic equipment as well as food products.

Due to a successful development in exports, a positive annual dynamics has been reached: output of production in comparable prices grew 1.3% year-on-year (data adjusted to the number of working days). That was accomplished by a very rapid rise in the production of wood pulp products and chemicals where output exceeded the previous year's level by more than one third.

March surveys of the business situation indicate that the entrepreneur evaluation of the situation development in industry is continuing to improve; moreover, the evaluation of the situation expected in the near future (in one month) has improved in March from -3 to +6 points. The outlook was last this positive at the beginning of 2008.