In September industrial production decreased

According to Statistics Estonia, in September 2013, the production of industrial enterprises decreased by 1% compared to September of the previous year. The decline in the production was most of all influenced by the decrease in the manufacture of electronic products.

Since January manufacturing showed a stable 2–6% growth compared to the same month of the previous year, whereas in August the production in manufacturing remained on the level of August 2012 and in September the production decreased 2%. The production did not exceed the volume of the previous year in about half of the branches of industry. Among the branches of industry holding larger shares, production fell in the manufacture of electronic products, electrical equipment and chemical products. The volume of production grew in the manufacture of wood, food and metal products.

In September, 70% of the whole production of manufacturing was sold on the external market. The export sales of manufacturing fell 3% compared to September 2012, while domestic sales increased 4%.

In September 2013 compared to August, the seasonally adjusted total industrial production decreased by 1%; manufacturing production remained on the level of the previous month.

Compared to September 2012, the production of electricity increased by 17%, while the production of heat fell by 8%.

The volume index and trend of production in manufacturing, January 2004 – September 2013 (2010 = 100)

Diagram: The volume index and trend of production in manufacturing

Read more from Statistics Estonia

Stable growth in retail sales

According to Statistics Estonia, in September 2013 compared to September of the previous year, the retail sales of goods of retail trade enterprises increased 5% at constant prices. The retail sales have shown a stable five-percent growth for the third month in succession compared to the same month of the previous year.

In September 2013, the retail sales of goods of retail trade enterprises were 378.9 million euros, which was almost 295 euros per inhabitant. The retail sales in stores selling manufactured goods increased 11% compared to September 2012. The sales increased in all economic activities. The retail sales of second-hand goods in stores and non-store retail sales (stalls, markets, direct sale) increased the most with the retail sales showing an increase of three quarters (76%) compared to September of the previous year. The sales increase in these stores does not significantly influence the retail sales of goods of retail trade enterprises, because the share of this economic activity is very small – 1.8% in September 2013. In September, an increase that was higher than the average occurred in stores selling household goods and appliances, hardware and building materials (18% growth), in retail sales via mail order or the Internet (16% growth) and in other specialised stores, such as stores selling computers and their accessories, photography supplies, books, sports equipment, games and toys, etc. (13% growth).

The retail sales in grocery stores have been rather stable during the last two months. Similarly to August, the retail sales of these stores increased 2% in September compared to the same month of the previous year.

The retail sales of automotive fuel stayed at the same level compared to September 2012.

Compared to the previous month, the retail sales in retail trade enterprises decreased 7% at constant prices in September. According to the seasonally and working-day adjusted data, the retail sales stayed at the same level compared to the previous month. During the nine months (January–September) of 2013, the retail sales in retail trade enterprises increased 5% at constant prices compared to the corresponding period of the previous year.

In September, the turnover of retail trade enterprises was 451.9 million euros, out of which the retail sales of goods accounted for 84%. Compared to September 2012, the turnover increased by 2% at current prices. Compared to the previous month, this indicator decreased 7%.

Retail sales volume index of retail trade enterprises and its trend, January 2003 – September 2013 (2010 = 100)

Diagram: Retail sales volume index of retail trade enterprises and its trend

Source: Statistics Estonia

Juhan Parts threatens to publish critical article about Reform Party

Ruling coalition partners Reform Party and IRL are accusing each other over whether Graanul Invest whose CEO Raul Kirjanen is prominent financial supporter of Reform Party should be paid a fee for electricity that it uses for own consumption, writes Päevaleht.

Jaanus Tamkivi, chairman of Reform Party’s parliamentary faction, claims that Minister of Economic Affairs Juhan Parts (IRL) threatened to publish a critical article in Postimees about Reform Party if the parliamentary committee on economic affairs votes for the draft power market act that in principle allows energy producers to receive a renewable energy fee for so-called own consumption.

Read more from BBN

Fast ferry operator Lindaliin seeks restructuring

Lindaliini AS, fast ferry operator between Tallinn and Helsinki, has applied for restructuring, writes Äripäev.

The company owes 1.2m euros in taxes which makes it one of the biggest tax debtors. Lindaliini CEO Enn Rohula emphasised that Lindaliini was not in immediate danger of bankruptcy and said that this season was successful.

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Baltics regain attractiveness for M&A transactions

Motivation to expand business in neighbouring markets has returned. More companies looking for potential targets in the Baltics indicates positive expectations for development in the region.  As for geographical preferences, companies looking for targets in the CIS region are stable in terms of numbers, while the Nordic countries and the rest of Europe have become slightly less popular compared with previous results of the Baltic M&A market survey prepared by law firm SORAINEN.

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Valga town councillor lets city pay exorbitant rent

Igor Jallai, Centre Party member and town councillor of Valga, a town in South Estonia, has come up with a nice income scheme where he charges the town exorbitant rents for apartments that Jallai leases to people who are receiving subsistence benefits, writes Eesti Päevaleht.

Jallai owns two residential buildings with 12 apartments in central Valga, a border town on Estonian-Latvian border.

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Companies have to prepare for the changes in how payments are made

Last week the European Central Bank published its second report on the readiness of countries in the euro area for the changeover to the Single European Payment Area, SEPA, and it became clear that Estonian companies still have a lot to do in the next three months. In the euro area as a whole, 56.3% of payments meet the SEPA requirements, but in Estonia only 1.5% do.

The banks in Estonia are on schedule with the changes required for the migration to SEPA and will have them made by 1 February 2014. As the changes have not yet been rolled out in full and this will largely be done in the next few months, there is an increased risk of payments being temporarily impeded. Problems may arise if there is not enough time for testing upgraded systems, including those between banks and companies. It is currently only cross-border euro payments that meet the SEPA conditions, which is why the total figure is so low at 1.5%. It is also worth noting that the banks in Estonia make payments to each other using the local retail payment system run by Eesti Pank and will do so until the end of January next year. Only once the Eesti Pank settlement system has closed will banks migrate all their payments into the pan-European retail payment system. The banks have already made all the preparations needed for this to happen.

“The figures in the European Central Bank’s report just under one hundred days before the deadline are certainly a cause for concern. The migration to the SEPA is not a project that only affects banks, as it will also require companies to make a lot of important changes”, said Madis Müller, Deputy Governor of Eesti Pank.

By 1 February 2014, public sector institutions and private companies need to be able to use the international IBAN form of their bank account numbers and to start sending payments and e-invoices to the bank using the new standards. The preparations of large companies and public sector institutions are generally satisfactory as they have started making preparations and will have them ready in time. For smaller companies the situation is a little more complicated.

Müller noted that businesses are better placed than they were in the spring, but the awareness levels of small companies are still low. “Companies generally believe that the necessary changes will be made to their databases, invoices, websites and elsewhere in time. But the new report and the review of the current state of preparations show that small businesses in particular still have a lot to do for all the changes to be made in time”. He added that Estonian companies are generally flexible and this gives hope that companies will manage to make the changes in the next three months or use the conversion services that will be put in place for making payments during the transition period.

To help make the transition as smooth as possible, bank clients will have an extra year until 1 February 2015 during which they can use conversion services where the banks change account numbers into the new format for private clients, though not for companies, and convert payments sent by companies into the ISO 20022 XML format.

Read more from the Bank of Estonia website