Latvia's calendar-adjusted industrial production expanded 2.7% y/y in July, after expanding by a robust 7.9% the previous month, the Central Statistical Bureau (CSB) reported on September 5.

The slower growth only confirms the erratic picture sketched by the Latvian industrial sector. With such uneven performance questions remain whether industry is capable of achieving sustained growth recovery.
 
Output in the manufacturing and utilities sector drove the growth in July, expanding 3.4% and 3.2% on the year, respectively. Production in the mining and quarrying sector declined 9.6%.

Within the manufacturing sector, production of computer, electronic and optical products boomed over 28%, followed by 13.2% growth in the machinery and equipment segment. On the other hand, manufacture of motor vehicles, trailers and semi-trailers dropped almost 11%.

In seasonally adjusted monthly terms, industrial production fell 1.9%, with mining and quarrying contracting 6.4%, while manufacturing fell 1%. The electricity and gas supply segment also dwindled, by 3.5% on the month.  

Latvian industry continues to struggle to build momentum. Output growth was seen slowing between November 2015 and March before contracting in April. In turn, May and June saw growth exceed 5%.

The mediocre growth in July will increase worries over the wider Latvian economy, which has recently been projected to expand just 1.9% in 2016, down from 2.7% in 2015. In the second quarter, the Latvian economy grew a seasonally adjusted 0.8% y/y, on the back of the faltering construction sector, the CSB announced on August 31.