LHV: Reduction in Estonia's industrial output reflects uncertainty ({{contentCtrl.commentsTotal}})

LHV's logo atop its office building in Tallinn.
LHV's logo atop its office building in Tallinn. Source: Siim Lõvi /ERR

The rather broad-based reduction in Estonia's industrial production in September reflects an overall uncertainty in society, LHV economic analyst Kristo Aab said on Friday.

Statistics Estonia announced earlier on Friday that the production of Estonian industrial enterprises in September was smaller by 2 percent than in September 2019. In the three main industrial sectors, the reduction in output was 2 percent in manufacturing, 5 percent in energy production and 8 percent in mining.

Statistics Estonia also said that the turnover of Estonia's retail trade enterprises totaled 643 million euros in September, marking an increase of 6 percent over September 2019 at constant prices.

"While the economy here as well as the economies of our neighbors have overcome the first shock, demand has not been restored in full yet. The clearest cooling is demonstrated by the construction sector -- the manufacture of building materials as well as metals have been on a  stable decline already for a year," Aab told BNS.

The wood sector fared better in September, managing to increase output, and growth continued also in the manufacture of electronics and computers.

"Looking at the longer-term trend, the reduction in production volumes in the manufacturing industry should slow down going forward, as we have a weaker base behind us from last year," Aab said, adding that energy production and mining, which depends on energy production, continue to suffer from poorer international competitiveness.

In retail, rather usual growth in sales volumes continued, which demonstrates households' continuously strong financial health and a better-than-feared situation on the labor market. 

"While the restrictions on redundancies connected with the emergency wage compensation had ended by September, the increase in the number of unemployed people was more subdued  than feared," the analyst said. He said that this instills courage in residents to go on with their lives as usual without significantly changing their consumption habits. 

A change has taken place, however, when it comes to the place where people prefer to do their shopping. 

"E-commerce, which had seen solid gains in popularity during the emergency situation, kept growing in September while, on the other hand, shopping at shopping malls has dropped a bit below last year's levels post-crisis," he added.

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Editor: Helen Wright

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