Business cycle survey - April 2004
Confidence of consumers is increasing, confidence of entrepreneurs remains stable
Publication Date: 28. 04. 2004
Product Code: r-1201-04
In April 2004 the composite confidence indicator balance increased compared to the previous month. Its value was positively influenced by the consumer confidence indicator and confidence indicator in construction. In total, the business indicator balance remained unchanged against last month.
In industry (950) 36% of respondents considered their economic situation in April good, 61% satisfactory and 3% bad, which is a better result than in March. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output worsened compared to the assessment in March (balance 1 pt. down). The assessment of current foreign demand (order books) for enterprise output remained unchanged against March. Finished goods stocks increased (balance 4 pts. up), the respondents say. Use of production capacities in April reached 85% (similarly as in the previous three quarters).
The respondents expect increase of production activity in next three months (balance 5 pts. up), unchanged development of employment and no changes in their total economic situation. However, in next six months to come they expect greater uncertainty and thus worsening of their economic situation (balance 9 pts. down). All the data seasonally adjusted.
On the whole, the confidence indicator in industry remained unchanged against the previous month. Compared y-o-y, it is 1 point down on April 2003; however, in the long-term comparison it reaches the second highest value since June 2001.
In construction enterprises (457) the good assessment of the current economic situation from previous months was maintained in April (after seasonal adjustment), however, against March there was a decrease. The assessment of domestic demand (order books) for enterprise output increased (balance 3 pts. up). The assessment of foreign demand (order books) for enterprise output increased, too (balance 12 pts. up). After previous distinctive improvement the respondents expect unchanged development of construction activity in next three months and at the same time unchanged development of employment. The overall confidence indicator in construction increased by 1 point compared to the previous month and it increased also in the y-o-y comparison (balance 2 points up).
Of respondents engaged in trade (324) 46% considered in April the economic situation of their enterprises good, 52% corresponding to the season and 2% bad, which is a 2 points increase of the balance in comparison to March (seasonally adjusted). Respondents signal decreased amount of stocks (balance 6 points down). In the next three months , respondents expect an increased demand and thus growth of sales of goods and increased demands for their suppliers. Unchanged price development is expected by 81% respondents, 13% expect growth and 6% expect drop. 67% of respondents anticipate no changes in the economic situation in next six months to come (56% in March ), 28% predict improvement (38% in March) and 5% expect worsening (6% in March). The overall confidence indicator in trade decreased when compared to March.
In selected services (754) 61% of the respondents assessed their economic situation in April to be good, 38% of them saw the situation adequate to the season and 1% saw it bad, which is the same assessment as in March. 43% of the respondents expected a rise in demand for enterprise output (order books), and 52% or 5% of respondents anticipated an unchanged or worse situation, respectively, which is better expectation than in March. No changes in prices should occur according to 72% of respondents, 21% envisage a rise and 7% a decrease in prices. A decrease in the number of employees is expected by 26% of respondents, no changes are expected by 58% of them, and 16% of respondents expect an increase. The overall confidence indicator in selected services increased.
A survey taken in consumers (1000) in April suggests an improvement of the balance of expectation of the total economic situation and their financial situation in next twelve months . The expected total economic situation balance increased by 2 points and the balance of expected consumers’ financial situation increased by 6 points. The share of consumers expecting an increase of unemployment decreased compared to March, and the balance decreased by 13 points. The share of consumers intending to save money increased (balance 5 pts. up). The overall consumer confidence indicator significantly increased compared to March; however, for the period from April 2003 to April 2004 the consumer confidence indicator balance decreased by 5 points.
Methodological notes:
Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Source: CZSO business surveys, GfK Praha consumer survey
End of data collection: 20 April 2004
End of data processing: 23 April 2004
For more information see: https://csu.gov.cz
Methodological explanatory notes :
The composite confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction, trade, and of the consumer confidence indicator. The composite business confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction and trade. The confidence indicator in industry has a double weight. Since January 2002, the consumer confidence indicator has been composed of four indicators (expected financial situation of consumers, expected total economic situation, expected total unemployment (with inverted sign) and savings expected in 12 months to come). Since January 2003, the confidence indicators have been presented as basic indices; the base being the average of 1995.
The branch confidence indicators are constructed as averages of seasonally adjusted weighted business cycle balances. The business cycle balance is the percentage difference between the responses “growth (+)” and “fall (-)”. The confidence indicator for industry is the average of seasonally adjusted balances of three indicators (the assessment of total demand, stocks of final production (with inverted sign) and the expected development of production activity). The confidence indicator for construction is the average of two indicators (the assessment of total demand and the expected development of employment). The confidence indicator for trade is the average of three indicators (the assessment of economic situation, stocks (with inverted sign) and the expected development of economic situation). The business cycle survey in selected services has been conducted by the Czech Statistical Office since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in the data for selected services. The time series are converted and the data are comparable. The confidence indicator for selected services is the average of three indicators (the assessment of economic situation, the assessment of demand and expected demand). The confidence indicator for selected services is not being included into composite indicators, yet.
The data above were derived in a weighted manner: sales were used as weights for industry, services and trade, whereas construction work of contractors and subcontractors was the weight for construction. The responding groups of enterprises account for more than a half of sales (industry) and volume (construction) and for a quarter of sales in trade.