The construction price index decline in the second quarter

According to Statistics Estonia, in the 2nd quarter of 2016, the construction price index changed by -0.6% compared to the first quarter of 2016 and by -1.3% compared to the second quarter of 2015.

In the 2nd quarter of 2016 compared to the same quarter of the previous year, the construction price index was influenced by the decrease in the cost of building materials, which provided over three-quarters of the total decrease of the index.

Compared to the previous quarter, prices of building materials fell by 0.9% in the 2nd quarter of 2016. The costs of building machines fell by 0.7% and labour force costs by 0.2%.

The repair and reconstruction work price index changed by -1.1% in the 2nd quarter of 2016 compared to the 1st quarter and by -1.6% compared to the 2nd quarter of 2015.

The calculation of the construction price index covers four groups of buildings: detached houses, blocks of flats, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in the expenditures on construction taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Change in the construction price index, 2nd quarter 2016
1st quarter 2016 – 2nd quarter 2016, % 2nd quarter 2015 – 2nd quarter 2016, %
TOTAL -0.6 -1.3
labour force -0.2 2.1
building machines -0.7 -1.8
building materials -0.9 -3.0
Index of detached houses -0.9 -0.9
Index of blocks of flats 0.1 -1.0
Index of industrial buildings – 1.4 -1.9
Index of office buildings -0.5 -1.2
Change in the repair and reconstruction work price index, 2nd quarter 2016
1st quarter 2016 – 2nd quarter 2016, % 2nd quarter 2015 – 2nd quarter 2016, %
TOTAL -1.1 -1.6
labour force 0.0 1.8
building machines 0.6 -2.4
building materials -2.0 – 3.8

Source: Statistics Estonia

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Turnover increased the most in stores selling second-hand goods

According to Statistics Estonia, in June 2016 compared to June 2015, the turnover of retail trade enterprises increased 4% at constant prices. While in May the turnover increased 8% compared to the same month of the previous year, in June the turnover growth decelerated.

In June 2016, the turnover of retail trade enterprises was 550.5 million euros.

The turnover growth of stores selling manufactured goods slowed down markedly in June. The turnover of those stores increased 13% in May compared to the same month of the previous year, whereas in June the growth was 6%. The turnover increased in five and decreased in two economic activities. Turnover increased the most in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale), with sales increasing 28% over a year. The turnover increased also in stores selling pharmaceutical goods and cosmetics (14% growth), via mail order or the Internet (10% growth), in stores selling textiles, clothing and footwear (9% growth) and in stores selling household goods and appliances, hardware and building materials (8% growth). The turnover in non-specialized stores selling predominantly industrial goods (e.g. department stores) and in other specialized stores, such as stores selling computers and their accessories, books, sports equipment, games and toys etc. decreased compared to June of the previous year.

The turnover growth of enterprises engaging in the retail sales of automotive fuel also decelerated in June. While in May the turnover of those enterprises increased 6% compared to the same month of the previous year, then in June the sales remained on the level of the previous year. The turnover growth deceleration was partly influenced by the higher reference base of June 2015 and deceleration in the price decrease of automotive fuel.

The turnover in grocery stores has shown a rather stable growth in the recent months. In June, the turnover of these stores increased 4% compared to June of the previous year.

Compared to the previous month, in June, the turnover of retail trade enterprises decreased 1%. According to the seasonally and working-day adjusted data the decrease was also 1%. In the six months of 2016 (January–June), the turnover in retail trade enterprises increased 6% compared to the corresponding period of the previous year.Diagram: Turnover volume index of retail trade enterprises and its trend

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This reduced the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increased the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in four working days.

Source: Statistics Estonia

About 66 pct of all domestic payments are made by card at the point of sale

  • The number of domestic cashless payments is growing continuously
  • Card payments account for 2/3 of all payments
  • Use of cards abroad by Estonian residents is also increasing and payments were made by card in 185 foreign countries in the second quarter

An average of 1.1 million domestic cashless payments were made each day in the second quarter of 2016 in Estonia, with a total value of 370 million euros. The number of payments was 7% higher than in the first quarter of last year, but the turnover was 6% smaller. The number of payments made by individuals and by companies has risen steadily, though the turnover of payments has been notably more volatile. The turnover of corporate payments is affected by the general level of economic activity, and also by the activities of individual large companies.

About 66% of all domestic payments are made by card at the point of sale. As card payments are used for small sums however, they account for only 3% of the total turnover. A daily average of 739,000 card payments were made in Estonia in the second quarter and 98% of them were made by private people.

Estonian residents made a daily average of 48,000 card payments outside Estonia in the second quarter. While December is the month that sees the most card payments in Estonia, it is the holiday months of June and July when cards issued in Estonia are used most frequently for payments abroad. The number of card payments made outside Estonia is 60-74% higher in the summer months than in January. Residents of Estonia paid by card in 185 different countries. Around one third of the card payments made abroad were made in Finland, where an average of 14,000 payments a day were made in the second quarter. Increased numbers of card payments were made in Sweden, Latvia and Russia too. In around half of the countries, Estonian residents made payments once a day on average. These were countries where the ability to pay by card is limited and to where fewer visits are made.

Data from Statistics Estonia show Estonian residents made 1.25 million trips abroad with an overnight stay in 2015, which is around one third more than ten years ago. At the same time that the number of card payments made outside Estonia has increased more than fourfold, the turnover is only 2.7 times higher, which indicates that cards are used more and more abroad for paying smaller amounts. The average payment abroad in 2006 was for 54 euros, but in the second quarter of this year, the average was 32 euros. The size of the average payment outside Estonia may be affected by the minimum sum for card payments imposed by some merchants.

Cash was withdrawn from ATMs outside Estonia an average of 3900 times per day, with withdrawals averaging 150 euros. The average withdrawal from cash machines in Estonia was 100 euros. While it is generally free to make card payments abroad, there is a service fee for making withdrawals from ATMs. More information about service fees can be found in Estonian from www.minuraha.ee.

Source: Bank of Estonia
Author: Tiina Soosalu, Payment and Settlement Systems Department

The portfolio of loans and leases to companies grew by 8 pct

  • The volume of loans and leases to companies continued to grow rapidly, increasing by 8% over the year
  • Households and companies had deposits of over 11 billion euros in banks at the end of June
  • The net profit of the banks was 89 million euros in the second quarter

The stock of loans and leases from banks to Estonian companies and private individuals was 6.4% larger in June than a year earlier at 16.5 billion euros. Growth accelerated in the loan and lease portfolio primarily because of loans to companies, which increased by 8% over the year.

In June, 230 million euros of long-term loans and leases were issued to companies, which is a similar amount to that of the preceding months. There was an increase of 18% in the loans and leases issued in June compared to the previous June. More loans went to companies in manufacturing and logistics in June than in the previous months.

Yearly growth in the portfolio of loans and leases to households has remained a little below 5% in the past half year. The largest share of loans to households was made up of housing loans, as 92 million euros of such loans were issued in June, 14% more than a year earlier. Having previously been relatively quick, growth in car leases slowed in June as sales of new cars were down on the previous two months.

The quality of the loan portfolio of the banks did not change, and the share of loans overdue by more than 60 days remained at 1.3%.

Households and companies had deposits of over 11 billion euros in banks for the first time in June, which was 7.5% more than a year earlier. The deposits of non-residents continued to shrink though.

The average interest rate on new housing loans rose slightly to 2.3% in June. This is the highest average interest rate on housing loans of recent years. The interest rate on corporate loans was the same as in the previous month at 2.5%.

Banks earned 89 million euros in net profit in the second quarter. Excluding dividends from subsidiaries and income tax paid, this is the biggest quarterly profit in recent years. Net interest income has particularly increased, primarily because interest expenses have declined.

Source: Bank of Estonia

Author: Jaak Tõrs, Head of the Financial Stability Department of Eesti Pank

The Estonian economy was a net borrower in 1stQ

  • Corporate debt liabilities are increasing through loans from banks, while the share of foreign borrowing has declined slightly
  • Household savings continue to grow faster than loans.
  • The Estonian economy was a net borrower again in the first quarter for the first time in more than two years

Yearly growth in corporate debt liabilities reached 3.7% in the first quarter. Growth in corporate debt has been driven in the past half year by loans from the domestic financial sector, the stock of which was 9% larger in the first quarter than a year earlier. The amount taken in loans from abroad or issued as bonds abroad shrank by 2% at the same time. The share of foreign loans in the debt liabilities of companies is a couple of percentage points lower than a year previously, and was 32% at the end of the quarter.

The volume of household loans was 5.6% larger than a year ago. Growth was much faster in loans and leases from leasing companies and other credit intermediaries1 than in bank loans. The share of all loan liabilities that was issued by such lenders climbed to its highest level ever at 9%. Yearly growth of 7% in household cash and deposits remains faster than growth in loans, but the gap has narrowed in recent quarters.

Yearly growth in the debt liabilities of households was faster than nominal growth in the economy in the first quarter. This did not have any significant impact on the level of debt in the non-financial sector though, and it remained at 130% of GDP.

The Estonian economy was a net borrower again in the first quarter for the first time in more than two years. In most quarters since 2009, Estonian residents have put more funds abroad than they have taken in from abroad, reflecting the decline in investment in the Estonian economy and increased saving. Although the financial transactions position was negative for a long time, there were no substantive changes in the financial behaviour of households. Companies reduced the loans they issued to other companies and their participation in other companies, and at the same time they increased their financial liabilities by taking out long-term loans.

Source: Bank of Estonia
Author: Jana Kask, Deputy Head of the Financial Stability Department of Eesti Pank

The current account surplus was in surplus in May

The flash estimate1 put the Estonian current account at 51 million euros in surplus in May 2016. The surplus on the goods and services account was 64 million euros, which was 51 million euros less than at the same time a year earlier. As goods exports were up 5% over the year and imports were up 10%, the faster growth in imports led the deficit in goods to widen to 105 million euros. The positive balance for services was close to its level of last year at 168 million euros. Exports of services were brought down by transport services and boosted by other services, while imports of transport services increased and those of other services declined. The net outflow of investment income and other income in the primary and secondary income accounts was 12 million euros in May, which is 4 million euros more than a year earlier. This was primarily because less was used in investment and other support from the European Union funds than a year previously.

The sum total of the current and capital accounts was 64 million euros in May. This means that the Estonian economy was a net lender to the rest of the world, so the country as a whole invested more resources abroad than it received from there.

See the graph on Bank of Estonia website

The number of tourists increased in May

According to Statistics Estonia, 280,000 domestic and foreign tourists stayed in accommodation establishments in May 2016, which was 4% more than in May 2015. The number of both domestic and foreign tourists increased.

191,000 foreign tourists and 89,000 domestic tourists used the services of accommodation establishments. Compared to May of the previous year, the number of both domestic and foreign tourists increased by 4%. 59% of the foreign tourists having used the services of accommodation establishments came from neighbouring countries Finland, Latvia and Russia. Compared to May of the previous year, 4% more tourists from Finland stayed in accommodation establishments, while the number of tourists from Latvia and Russia decreased. There was also an increase in the number of tourists arriving from several other European countries – Germany, Sweden, Lithuania, Poland, etc. Among tourists using the services of accommodation establishments, the number of tourists arriving from Asian countries continues to increase. Compared to May 2015, 10% more tourists arrived from Japan and 8% more tourists arrived from China. 30% of the foreign tourists having used accommodation services stayed in accommodation establishments located outside of Tallinn, 30% of them stayed in the accommodation establishments of Pärnu county, 20% in Tartu county and 12% in Ida-Viru county.

32% of the clients of accommodation establishments were domestic tourists, of whom 57% were on a holiday trip and 29% on a business trip. 27% of the domestic tourists having used accommodation services stayed in the accommodation establishments of Harju county, 13% in Pärnu county, 12% in Tartu county and 10% in Ida-Viru county. In most counties, the number of domestic tourists staying in accommodation establishments increased compared to May 2015.

In May, 1,108 accommodation establishments offered services for tourists. 20,000 rooms and 46,000 beds (800 beds more than in May 2015) were available for tourists. 46% of the rooms and 36% of the beds were occupied. The average cost of a guest night was 38 euros or 2 euros more than in May a year earlier. The average cost of a guest night was 44 euros in Harju county, 32 euros in Tartu county, 31 euros in Pärnu county and 30 euros in Ida-Viru county.

Read more from Statistics Estonia