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Saturday, August 30, 2008

Latvia Retail Sales Continue Their Fall, As Does Housebuilding, Even While Real Wages Continue To Rise

Latvian retail sales were down again in July, both on June 2008 and on July 2007. Compared to July 2007, the seasonally and working day adusted constant price index was down by 8.5%. The largest volume decrease was in non-food products group - by 9.4%. There was a slighly smaller decrease in food products, which were down by 6. The only increases were in mail order business – up by 7.2% and in retail trade in pharmaceutical and medical goods – up by 3.2%.

In July compared to June 2008 (seasonally adjusted data, at constant prices),sales were down by 0.2%. Retail sales of food products were down by 3.3%, but non-food products increased by 1.6% on the month.

In the January—July period, retail sales were down by 3.9% (working day adjusted data, at constant prices) when compared with the same period in 2007. Food products were down by 5.3%, and non-food products by 3.1%.

Housebuilding Continues To Decline

Latvian construction was up in the 2nd quarter of 2008 by 5.7% (at constant prices), when compared with the 2nd quarter of 2007, according to data from the Lavian Statistics Bureau.

There was however a big change in the composition of construction activity: new construction and repairs of main pipelines, communication and power lines were up 71%, motorways and streets 50.3%, factories and warehouses 32.9%. on the other hand the construction and repair of residential buildings was down 27.7%, the construction of hotels and similar buildings was down 41.5%, and wholesale and retail buildings were down 25.7%.

And Real Wages Continue To Rise

On changes of wages and salaries in the 2nd quarter of 2008 The information compiled by the Central Statistical Bureau shows that, compared to the 1st quarter,

Monthly average gross wages and salaries increased in Latvia increased in Q2 2008, when compared with Q1 2008 from 453 to 477 lats, or by 5.3%, while compared to Q2 2007 they increased by 23.6%. Gross wages and salaries grew slightly more rapidly in private sector (up by 23.9%), while in public sector the increase was 22.5%.

Net monthly wages and salaries in this period increased by 25.6% and reached 348 lats. Allowing for consumer price growth of 17.7% on the quarter, the real increase in wages and salaries amounted to 6.7%. So while the rate of increase declines steadily (see chart below) even in the midst of recession Latvian wages continue to rise far more rapidly than any accompanying productivity gains.

In private sector wages and salaries still were lower than in public sector. There in the 2nd quarter of this year they reached 568 lats, and, if compared to the same period of previous year, that is 104 lats more. In private sector 434 lats and increase comprised 84 lats, respectively.

If examining the gross wages and salaries in breakdown by kinds of economic activities, it may be concluded that, compared to the 2nd quarter of previous year, in the 2nd quarter of this year the most rapid increase of wages and salaries was in economic activities as education - by 28.8% (from 361 to 465 lats), hotels and restaurants – by 27.0% (from 233 to 296 lats), other community, social and personal services – by 24.8% (from 346 to 432 lats), real estate, renting and business activities – by 24.6% (from 401 to 500 lats) and trade – by 24.4 % (from 319 to 397 lats).

Among the Baltic States the highest gross wages and salaries in the 2nd quarter of this year, just like in all quarters of previous year, were in Estonia – 850 euro, in Latvia – 679 euro, but the lowest – in Lithuania – 648 euro. Compared to the 2nd quarter of 2007, Latvia witnessed the highest increase – 23.6%, Lithuania – 22.5%, and Estonia – 15.2%. But compared to the 1st quarter of this year, the highest increase in the 2nd quarter was in Estonia – 7.9%, in Latvia – 5.3%, and in Lithuania – 4.0%.

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