2024-07-30 12:59:46
Sales grew
Production sales were boosted by many higher value-added manufacturing activities.
In the second quarter of this year, sales of manufactured goods, calculated at comparable prices and after considering the effects of seasonal factors, grew by 4.5 percent during the quarter.
Although more than half of the increase was due to oil refining, a highly volatile activity in sales, sales of manufactured goods rose in many of the main manufacturing activities and contributed to the increase in manufactured goods by a fairly similar amount.
Lower sales of production than in the previous quarter were recorded only in the activities of food and beverage production, textile and clothing sewing.
The volume of sales of a significant part of manufacturing activities is currently above or close to the level fixed before the Russian war in Ukraine and the energy crisis.
However, significant difficulties are still experienced by the production of wood and furniture, the chemical industry, sales of these activities are still 20-30 percent. lower than before the Russian war in Ukraine.
Manufacturing industry expectations are the lowest since last fall
However, the mood of manufacturing companies regarding the future is less favorable than it was in the first half of the year.
The manufacturing confidence indicator published by the European Commission does not allow to expect that manufacturing production will grow at such a fast pace in the next quarter as in the first half of this year.
After a significant improvement at the beginning of the year, the company’s production expectations worsened in June this year as well. was at its lowest level since last fall.
Such deterioration of production expectations is associated with orders in foreign markets that are still not recovering.
For example, the purchasing manager’s index of the euro zone – Lithuania’s largest trading partner – in July. was 50.1 and only slightly exceeded the 50-point threshold that separates economic growth from recession.
The latest data shows that industrial difficulties persist in the Eurozone, while activity in the service sector is fading.
These unfavorable trends suppress the hiring expectations of companies and adversely affect the demand for goods and services.
The future of the construction sector is choppy
After a pause at the turn of the year, activity in the construction sector is growing again, but further development will not be smooth.
in 2024 April-May the average volume of work in the construction sector, calculated at comparable prices and after considering the effect of seasonal factors, was almost 4.0 percent. higher than in the first quarter.
A higher volume of construction was recorded in all main segments – construction of residential and non-residential buildings, construction of engineering structures.
Fund flows from European Union funds and public sector investments should support the volume of engineering construction works.
And in recent quarters, the volume of issued permits for non-residential construction has significantly increased, allowing us to expect more active construction of this type of structures.
However, the volume of construction of residential buildings is likely to decrease in the coming quarters.
This is connected with the decreasing area of the buildings started to be built and the non-increasing area of the buildings allowed to be built.
Consumption is growing
A favorable situation in the labor market and the optimism of the population are driving the recovery of consumption.
in 2024 in the second quarter, compared to the previous quarter, the turnover of retail trade, calculated at constant prices and taking into account the effect of seasonal factors, increased by 0.8 percent. and was almost 4 percent. higher than a year ago.
Adjusted for price changes, retail sales in the second quarter were already slightly higher than in 2022. in the first quarter, before the energy price shock.
The rebound in consumer spending growth can be attributed to the cessation of rapidly rising prices, the still favorable situation in the labor market and the improving mood of households.
This created the conditions for an ever faster increase in the purchasing power of households and had a positive impact on the willingness to consume.
For example, in the middle of this year, consumer opinion about whether it’s appropriate to make a major purchase now — whether it’s furniture, appliances or other similar items — was the best it’s been since 2022. beginning
Overall, household sentiment in the middle of this year is the best since the start of the COVID-19 pandemic.
Households’ assessment of their financial situation over the next 12 months is perhaps the most optimistic since the release of the data, expectations for the development of the economy and unemployment continue to improve, and the assessment of the financial situation remains extremely favorable.
Real estate transaction drought
The growth of activity in the market services sector has stalled.
Based on April-May of this year. according to data calculated at comparable prices and after taking into account the effect of seasonal factors, the sales of the market services sector were slightly lower than in the first quarter, but were still 7.4 percent. higher than a year ago.
Sales did not increase significantly in many activities of the service sector, and the most significant fall was recorded in the activities of real estate operations.
Among the activities of the service sector, companies providing information and communication services stood out with extremely favorable trends, their sales have been growing at a fast pace for some time.
After a rather pessimistic mood at the beginning of the year, expectations of service companies are recovering.
The confidence index of the service sector published by the European Commission in June of this year. rose to a level not seen for almost a year.
The more favorable mood of the companies was determined by the improvement of the existing situation of the companies and more positive expectations regarding the development of demand in the coming months.
This change in sentiment is particularly evident in companies providing transport and storage services.
It is true that expectations remain below the historical average, and the development of the sector will also depend on how quickly the faltering industry and trade in the main export markets recover.
There are no changes in the forecasts
The growth trend of the Lithuanian economy should not change in the coming quarters.
It should be driven mostly by rising household consumption costs.
Increasing household consumption will be favorably influenced by rapidly growing incomes of the population, slightly increasing prices, and good moods of households.
The economies of the main trading partners, which are slowly recovering, but not as fast as previously expected, will create conditions for greater activity in the exporting sector.
This, together with the ever-increasing funds of the European Union funds and growing orders from the government sector, will have a favorable effect on the development of investments, and they should also increase.
2024-07-30 12:59:46