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According to surveys compiled by the European Commission and the CSB, the biggest obstacle for companies to increase production faster is the lack of labor. This is ahead of what is usually the most popular limiting factor: insufficient demand. Buceniece informs that the last time we could observe such a situation was at the end of 2007. Continuing tensions in global supply chains and high prices for raw materials and components also do not help companies in the sector.
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The most significant contribution to the increase in total output in October was made by the manufacture of fabricated metal products (by 14.6%) and furniture (by 30.6%). There is also a good increase in the production of non-metallic mineral products (by 8.4%), where a large part is made up of construction materials. The metal and building materials industries are likely to be supported by stronger activity in the construction sector in Europe, while construction in Latvia is still in a preparatory position ahead of the upcoming race, the economist explains.
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“Turnover data show that, especially in the case of construction materials, export turnover has grown faster than in the domestic market. Turnover of metal products grew slightly faster in the domestic market in October, but if we exclude the price effect, exports predominate. “The new home or office also stimulates demand for building materials and furniture,” says Buceniece.
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She added that the chemical industry, the manufacture of machinery and equipment nec, the manufacture of motor vehicles, trailers and semi-trailers, and the manufacture of clothing and beverages also showed strong double-digit growth in output in October.
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On the other hand, the disadvantages fell in the largest sub-sector of manufacturing – the production of wood and wood products decreased by 6.4% year-on-year. Buceniece thinks this was also the main reason why the growth of production in the manufacturing industry as a whole was the slowest in the last seven months. Stocks of finished products in wood processing are currently quite large and prices are high, so the turnover continued to grow rapidly.
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Both the domestic market and exports of wood increased by about 50%. Although surveys show that the mood of companies in the sector is no longer as optimistic as in the summer, it is still above the long-term average, Buceniece points out. She emphasizes that demand continues to grow and that companies’ expectations for production in the next three months are also showing a plus sign, although the plus sign has shrunk slightly.
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“Accordingly, the coming months do not promise leukutrius in wood processing, but it looks quite good. After a steady rise of more than a year, producer prices for wood products began to fall on a monthly basis in October, and companies expect the decline to continue at least in the coming months. from now on heights, “explains Buceniece.
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The economist adds that in the manufacturing industry as a whole, the mood among companies is less optimistic than in the middle of the year, a similar picture can be observed in Europe. This is due to a lack of raw materials, equipment and manpower, as well as concerns about the proliferation of Covid-19 on demand, but mainly on even greater supply chain challenges.
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“However, in both Latvian and European surveys, companies expect a small increase in production. The new Covid-19 variant omicron can make adjustments to this story. Although there are still many unanswered questions about this variant and its impact, it is likely to manufacturers look even more cautiously at future business activity, “predicts Buceniece.
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It has already been reported that industrial output in Latvia has increased by 7% at constant prices in ten months of this year, according to calendar-adjusted data, according to the Central Statistical Bureau (CSB).
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Of which, manufacturing grew by 8.1%, while mining and quarrying grew by 6.2% and electricity and gas supply by 1.5%.
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CSB data show that in October this year, compared to October 2020, the volume of industrial production according to calendar adjusted data at constant prices increased by 2.4%.
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Production increased by 3.9% in manufacturing and by 3.1% in mining and quarrying, while it decreased by 7.1% in electricity and gas supply.
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