Construction price index is up again

According to Statistics Estonia, the change of the construction price index in the 1st quarter of 2017 was 0.4% compared to the 4th quarter of 2016, and 0.7% compared to the 1st quarter of 2016.

In the 1st quarter of 2017, compared to the same quarter of the previous year, the construction price index was primarily affected by an increase in the costs of building materials and labour, which accounted for more than 60% and over a third of the total increase of the index, respectively.

Compared to the previous quarter, costs of building materials increased by 0.4%, costs of building machines increased by 0.5% and labour costs increased by 0.5%.

In the 1st quarter of 2017, the change of the repair and reconstruction work price index was 0.4% compared to the 4th quarter of 2016 and 0.5% compared to the 1st quarter of 2016.

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, 1st quarter 2017
4th quarter 2016 – 1st quarter 2017, % 1st quarter 2016 – 1st quarter 2017, %
TOTAL 0.4 0.7
labour force 0.5 0.7
building machines 0.5 0.3
building materials 0.4 0.7
Index of detached houses 0.3 0.5
Index of blocks of flats -0.1 0.6
Index of industrial buildings 0.5 0.3
Index of office buildings 0.6 0.9

 

Change in the repair and reconstruction work price index, 1st quarter 2017
4th quarter 2016 – 1st quarter 2017, % 1st quarter 2016 – 1st quarter 2017, %
TOTAL 0.4 0.5
labour force 0.1 0.4
building machines 1.0 1.9
building materials 0.4 0.4

For the statistical activity “Construction price index”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting this statistical activity.

Source: Statistics Estonia

Estonian gender pay gap decreased to 21 pct

According to Statistics Estonia, in October 2016, the average gross hourly earnings of female employees were 20.9% lower than the average gross hourly earnings of male employees. The gender pay gap decreased by 1.3 percentage points compared to the previous year. The gender pay gap decreased by 1.3 percentage points for the third year in a row.

In October 2016, the average gross hourly earnings without irregular bonuses and premiums were 6.04 euros for female employees and 7.63 euros for male employees. Compared to 2015, gross hourly earnings increased 11.6% for female employees and 9.8% for male employees. In the past three years, the gross hourly earnings of female employees have risen faster than the gross hourly earnings of male employees, which is the main reason for the decrease in the pay gap (the difference between the hourly earnings of male and female employees).

In 2016, the gender pay gap was the biggest in mining and quarrying (36.4%), where the majority of employees are men. A larger share of male employees in a particular field of activity is not always related to a bigger than average pay gap. Another economic activity with mostly male employees is construction, but the pay gap in this field is smaller than average – 15.3%.

After mining and quarrying, the next biggest pay gaps were recorded in financial and insurance activities (33.0%), manufacturing (29.5%), wholesale and retail trade (29.0%) and human health and social work activities (26.0%). The difference between the gross hourly earnings of male and female employees was smallest in water supply; sewerage, waste management and remediation activities (8.9%), public administration and defence (8.0%) and other service activities (7.8%). The pay gap was non-existent in transportation and storage activities.

Compared to 2015, the gender pay gap increased the most in administrative and support service activities (8.0 percentage points), accommodation and food service activities (4.9 percentage points), and in mining and quarrying (4.1 percentage points) and decreased the most in construction (6.3 percentage points), other service activities (6.2 percentage points) and professional, scientific and technical activities (6.1 percentage points). In the past five years, the pay gap has decreased the most in other service activities and real estate activities and increased the most in administrative and support service activities, in agriculture, forestry and fishing and in mining and quarrying.

With regard to ownership, the pay gap in institutions and enterprises owned by the state and local governments was smaller than in enterprises owned by Estonian or foreign private entities. In 2016, the pay gap in state institutions and enterprises was 17.0% and in local government institutions and enterprises 11.6%, whereas the pay gap in the enterprises owned by Estonian private entities was 19.5% and in the enterprises owned by foreign private entities 29.7%.

The pay gap in the public sector (includes state and local government institutions and enterprises) and private sector (includes enterprises owned by Estonian and foreign private entities) was almost the same – 21.6% and 21.8%, respectively.

In 2016, the pay gap was the biggest in Ida-Viru (27.9%), Jõgeva (25.3%), Hiiu (23.4%) and Lääne (22.1%) counties and smallest in Põlva (11.3%), Rapla (15.1%) and Tartu (15.9%) counties.The difference between the gross hourly earnings of female and male employees, 2016

Statistics Estonia and Eurostat use different methodologies to calculate the gender pay gap. Although Eurostat receives data from the statistical offices of the Member States, the pay gap published by Eurostat does not take into account the indicators of enterprises and institutions with fewer than 10 employees; it also excludes the earnings of employees in agriculture, forestry and fishing and in public administration and defence. According to Eurostat’s calculations, the gender pay gap in Estonia is the biggest in the European Union (26.9% in 2015). According to Statistics Estonia, the gender pay gap in Estonia in 2015 was 22.2%, taking into account all enterprises and institutions and all economic activities.

Statistics Estonia has calculated the pay gap since 1994. In 2016, the sample included around 12,350 enterprises, institutions and organisations. The gender pay gap is calculated by deducting the average gross hourly earnings of female employees from the average gross hourly earnings of male employees, divided by the average gross hourly earnings of male employees and expressed as a percentage. The calculated average gross hourly earnings do not include irregular bonuses and premiums.

The statistics are based on the questionnaire “Wages, annex for October” (from 2017, the name of the statistical activity is “Gender pay gap”), the deadline of which was 1 December 2016. For the statistical activity, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia (see graph)

In March petrol was 18.5 pct more expensive than last year

According to Statistics Estonia, the change of the consumer price index in March 2017 was 0.3% compared to February 2017 and 2.8% compared to March of the previous year.

Compared to March 2016, goods were 3.2% and services 2.1% more expensive. Regulated prices of goods and services have risen by 5.9% and non-regulated prices by 2.0% compared to March of the previous year.

Compared to March 2016, the consumer price index was affected the most by the price increase of motor fuel. Compared to March of the previous year, diesel was 19% and petrol 18.5% more expensive. Almost an equal impact on the index was caused by the 4% increase in the prices of food and non-alcoholic beverages, of which 2/7 were contributed by milk, dairy products and eggs, 1/7 by sugar and confectionery, and another 1/7 by fish and fish products. Of food products, the biggest price increases were seen for potatoes (25%), fresh fish (24%) and sugar (20%).

In March, compared to February, the consumer price index was affected the most by a 1% increase in the prices of food and non-alcoholic beverages, of which more than half were contributed by 3.4% more expensive vegetables and 3.3% more expensive fruit. The end of winter sales of clothing and footwear and the 3.8% price decrease of electricity that arrived at homes also had a significant impact on the index.

Change of the consumer price index by commodity groups, March 2017
Commodity group March 2016 – March 2017, % February 2017 – March 2017, %
TOTAL 2.8 0.3
Food and non-alcoholic beverages 4.0 1.0
Alcoholic beverages and tobacco 6.3 0.8
Clothing and footwear 3.2 3.3
Housing 1.1 -0.9
Household goods 0.1 -0.4
Health 1.3 -0.6
Transport 6.6 0.0
Communications -2.2 -0.3
Recreation and culture -0.4 0.9
Education 2.8 0.0
Hotels, cafés and restaurants 4.7 0.4
Miscellaneous goods and services 1.3 -1.4

Source: Statistics Estonia

The exports of goods of Estonian origin grew 9 pct in February

According to Statistics Estonia, in February 2017, the exports of goods increased by 6% and imports by 1% compared February 2016. In February, the exports of goods of Estonian origin grew 9%, while re-exports stayed at the same level as one year ago.

In February 2017, exports from Estonia amounted to 1 billion euros and imports to Estonia to 1.1 billion euros at current prices. The trade deficit was 97 million euros (in February 2016, it was 140 million euros).

The top destination countries of Estonia’s exports in February were Finland (16% of Estonia’s total exports), Sweden (14%) and Latvia (8%). The biggest increase occurred in exports to the Netherlands (up by 27 million euros, i.e. two-fold), Russia (up by 17 million euros) and China (up by 12 million euros). These rises are mainly due to increased exports of mineral products to the Netherlands, of mechanical appliances to Russia and of electrical equipment to China. Exports to Sweden decreased the most.

The biggest share in exports was held by electrical equipment, followed by wood and articles of wood and mineral products. The increase in exports was affected by the exports of mineral products (up by 32 million euros), mechanical appliances (up by 27 million euros), and raw materials and products of chemical industry (up by 14 million euros). There was a decrease in the exports of electrical equipment.

The share of goods of Estonian origin in total exports was 75%. The rise in the exports of goods of Estonian origin was affected the most by an increase in the exports of minerals products (incl. shale oil), mechanical appliances (incl. machine tools for working wood, packing machinery) and wood and articles of wood (incl. softwood saw-timber, wood pellets, wood in chips). Goods of Estonian origin are exported the most to Sweden, Finland and the Netherlands. The biggest increase in the exports of goods of Estonian origin was in the exports to the Netherlands (up by 28 million euros) and the biggest decrease in the exports to Sweden (down by 43 million euros).

The main countries of consignment in February 2017 were Finland (13% of Estonia’s total imports), Germany (11%), Sweden (9%) and Lithuania (9%). The biggest increase occurred in imports from Russia (up by 22 million euros) and Denmark (up by 10 million euros), while imports from Hungary decreased the most (down by 26 million euros).

In February, the main commodities imported to Estonia were electrical equipment, mineral products, mechanical appliances, agricultural products and food preparations, transport equipment and raw materials and products of chemical industry. The biggest increase was in the imports of mineral products (incl. motor spirit) and the biggest fall occurred in the imports of electrical equipment.

In February 2017, foreign trade export volume index decreased by 14% and import volume index increased by 3% compared to the same period of the previous year.Estonia’s foreign trade by month, 2015–2017

Read more from Statistics Estonia

Core inflation remains low in Estonia

  • Oil and foodstuffs were cheaper on global markets in March than in February
  • Core inflation remains low in Estonia and the euro area

Data from Statistics Estonia show that consumer price inflation slowed to 2.8% in March from 3.4% a year earlier. The price level was 0.3% higher than in the previous month. Energy prices were up 7% over the year and prices for foodstuffs, including alcohol and tobacco were up 4.5%, while core inflation remained low at 1%.

Price pressure weakened a little on the world market in March, and that was reflected in Estonian consumer prices too. The crude oil price was down at the start of March on world markets as oil production increased in the USA, offsetting the earlier production limits introduced by OPEC countries. Food commodities were also cheaper in March than in February, with data from the UN’s Food and Agriculture Organization (FAO) showing prices down 2.3%. Cheaper oil had an immediate impact on Estonian consumer prices as motor fuels fell in price by 1.3% over the month. Rises and falls in food commodities on world markets usually pass through into Estonian prices over three quarters.

Around half of the rise in food prices, or two percentage points, was due to the rise in excise on alcohol and tobacco at the start of this year. As companies built up big stocks at the end of last year, the tax impact of this rise has so far passed through into consumer prices more slowly than the rise last year did. For this reason it may be assumed that the excise rise will affect prices further in the months ahead.

Average inflation in the euro area slowed in March from 2% to 1.5%, partly because of the low rate of core inflation. Core inflation is an important figure for monetary policy, as it is observed together with other key indicators for the economy. Core inflation in the euro area, from which the volatile prices of energy and food are excluded, slowed mainly because of manufactured goods. These fell further in price in several larger euro area countries even as the prices of raw materials and the intermediate goods used in manufacturing were up on the year. As core inflation is dependent on economic activity, and surveys indicate a continued increase in economic activity in the euro area, it may be assumed that core inflation will rise during the year.

Inflation in Estonia and euro area

See better graph on Bank of Estonia website here

Author: Sulev Pert, Economist at Eesti Pank

The prices of Estonian apartments increased by 4.5 pct in 2016

According to Statistics Estonia, the Dwelling Price Index increased by 4.7% in 2016 compared to the average of 2015. In the annual comparison, the prices of apartments increased by 4.5% and the prices of houses by 5.4%.

The annual change of the Dwelling Price Index was 8.5% in 2011, 7.3% in 2012, 10.7% in 2013, 13.7% in 2014 and 6.9% in 2015.

The prices of apartments increased in 2016 compared to average of 2015 in all three areas under observation: by 3.4% in Tallinn, by 5.4% in areas bordering Tallinn with Tartu and Pärnu cities and by 8.6% in the rest of Estonia.Dwelling Price Index, change over previous year, 2006–2016

In the 4th quarter of 2016 compared to the 3rd quarter, the Dwelling Price Index increased by 1.2% and compared to the 4th quarter of 2015 by 7.7%.

The Dwelling Price Index expresses the changes in the transaction square metre prices of dwellings purchased by households. The Dwelling Price Indices have been compiled for apartments and houses (including detached, semi-detached and terraced houses).

The Owner-Occupied Housing Price Index increased by 3.5% in 2016 compared to the average of 2015.

In the 4th quarter of 2016, the Owner-Occupied Housing Price Index changed by -0.1% compared to the 3rd quarter and by 8.5% compared to the 4th quarter of 2015.

The Owner-Occupied Housing Price Index expresses the changes in the prices of the acquisition of dwellings new to the household sector and other goods and services that households purchase in their role as owner-occupiers. The index consists of four parts: the acquisition of dwellings, other services related to the acquisition of dwellings, major repairs and maintenance, and insurance connected with dwellings.

The Owner-Occupied Housing Price Index is published on the base 2010 = 100. The time series starts from the 1st quarter of 2005; major repairs and maintenance are included from the 1st quarter of 2007 and insurance connected with dwellings is included from the 1st quarter of 2012. The annual index is calculated as the average of four quarters.

For the statistical activity “Dwelling price index and owner-occupied housing price index”, the main representative of public interest is the Ministry of Finance commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia

Estonian general government debt declined

According to the preliminary data of Statistics Estonia, in 2016, the Estonian general government surplus was 0.3% and the gross debt level was 9.5% of the gross domestic product.

At the end of 2016, the total revenues of the general government exceeded the expenditures by 56.7 million euros, accounted as the Maastricht deficit criteria, and all sub-sectors ended the year positively. By the end of 2016, the surplus of revenues of the central government sub-sector was 13.8 million euros and the consolidated budget of the local government sector was 35.8 million euros in surplus. The budget surplus of social security funds decreased to 7.1 million euros, continuing the declining trend for the fifth year in a row.

The consolidated debt of the general government (Maastricht debt) amounted to nearly 2 billion euros by the end of 2016, having fallen 3% compared to 2015. The local governments as well as the central government contributed to the fall of the debt level. At the end of 2016, the debt of the central government sub-sector totalled 2.2 billion euros of which 822 million euros were liabilities towards other sub-sectors. The local governments’ debt accounted for 0.7 billion euros. Social security funds did not contribute to the debt of the general government sector.

The loan liabilities of the central government decreased by 3% and the volume of long-term securities issued by the public-legal institutions and foundations belonging to the central government decreased by 7%. The share of foreign debt in the central government’s loan liabilities was 52%.

The overall debt level of the local governments fell by 3% compared to 2015. The volume of long-term securities decreased by 2% over the year and the liabilities of loans decreased by 3%. Liabilities towards the rest of the world accounted for 21% of the local governments’ debt.

Surplus/deficit of the general government in Estonia by sub-sectors, 2008–2016

In Estonia, the general government sector comprises three sub-sectors: 1) central government (state budget units and extra-budgetary funds, foundations, legal persons in public law); 2) local governments (city and rural municipality governments with their subsidiary units, foundations); 3) social security funds (Estonian Health Insurance Fund, Estonian Unemployment Insurance Fund).

Source: Statistics Estonia