Of industry and trade, unchanged

Major economic indicators published this week included fresh data on Estonia’s industrial output, including its export and new orders as well as retail trade sales figures. Furthermore, Statistics Estonia published further details concerning the Q2 wage statistics, supplementing the figures released in early September. The updated economic indicators, however, offer no big surprises: the trends to date continue.

Decline in industrial output continues
Estonia’s industrial output decreased in August yet again. As in previous months, electricity generation, down due to cheaper imported electricity, contributed substantially to the decline. In the three summer months, Estonia imported two and a half times more electricity than during the same period last year. The electricity market, now open, enables consumers to enjoy significant savings; however, the summer was on the poor side for local manufacturers.

The output volume of the processing industry continues to decline as well. Compared to August last year, production of goods was down 2%. Although production volumes grew in several important industries, fields of activity with decreased volumes constituted the majority. Results for the processing industry were impacted heavily by the 12% drop in the output of the electronics industry. However, it is not the general weakness of the sector but rather the very high reference base from last year that should be considered the cause for the substantial decrease in production volumes. The timber and furniture industries continue to do well and were able to grow their output volumes 7% and 13%, respectively, in August. Of the major industry sectors, production outputs grew also in food production (2%), the manufacturing of metal products (4%) and the manufacturing of electrical equipment (3%). Whereas the export index for industrial output, which expresses in constant prices the value of the industrial output sold abroad, was still zero for the first seven months of the year, the export of industrial output decreased 7% in August. After a substantial decline in Q2, the volume of output sold on the Estonian market rose 4% in August.

August saw the volume of new orders decrease in the processing industry for a fourth month in a row; however, whereas decline reached nearly 14% in Q2, the volume of new orders decreased only 2% in August. New orders have been declining almost all year long in the manufacturing of chemical products and in recent months also in the electronics industry; however, orders for electrical equipment grew by a quarter in August.

Growth in retail persists alongside declining prices
Sales by retailers continue to thrive. In August, the volume index for retail sales grew 8% year on year. Similarly to previous months, growth was fastest for goods sold online or by mail order or in other specialist shops. Compared to August last year, household effects, domestic appliances, hardware and building materials also sold significantly better. Sales of motor fuels increased significantly, stimulated by the decline in fuel prices.

Consumption is supported by the continued decline in prices, which reached 0.3% year on year in August. Whereas the decline in prices is marginal in terms of the consumer basket average, transport costs, down 7%, seem to hold significant savings. Housing costs, which take up an important position in an average family budget, declined 1.5% in August. The decline in the prices of food products, the most important component in the consumer price index, has stalled, growing 0.4% in August.

Wages rising fast in sectors requiring qualifications
This week, Statistics Estonia published detailed data concerning the Q2 wage statistics. As you may recall, mean wages in Q2 grew nearly 6% year on year; however, wage growth has not been equal in all fields. In both per cent and euro terms, mean wages grew fastest in the field of advertising and market research: 272 euros, or 21%. Strong growth was posted also by information services (web portals and web hosting, news agencies), where mean gross wages increased by 243 euros, or 16%. The recovery in the construction sector this year is also reflected in the wage statistics: mean wages grew 214 euros (15%) in the construction of buildings, 164 euros (11%) in the construction of civil engineering projects, and 162 euros (14%) at architectural and engineering firms. All of the above fields require workers to have proper qualifications, and given low unemployment professionals enjoy a strong position during negotiations.

On the labour market, people in the IT and financial sectors continue to be the best paid. In Q2, mean wages were highest in the field of programming, reaching as much as 2468 euros. At 2039 euros, the field of insurance and pension funds lagged far behind programming. Mean wages reached 1973 euros in the financial services sector. Mean gross wages are lowest in services to buildings and landscape, clothing manufacturing and care services, remaining below 700 euros in all of the said fields.

It should be cause for concern among wage earners that the mean number of hours worked is down for a fifth quarter in a row. Given that growth in productivity is non-existent currently, less work means lower demand for employers’ products and services, which may end in great gains in spare time, coupled with deep losses in income, for employees.


For more information:

Evelin Allas
Communications Manager
Marketing and Communications Division
SEB
Phone +372 665 5649
Mobile +372 511 1718
Address Tornimäe 2, 15010 Tallinn
E-mail evelin.allas@seb.ee
www.seb.ee