Business cycle survey - April 2008

In April 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased by 0.7 point compared to March 2008. Business confidence indicator balance decreased by 0.5 point and the balance of consumer confidence indicator by 1.1 point. Compared to April 2007, the composite confidence indicator balance dropped by 2.6 points, the confidence of entrepreneurs is 3.4 points down; the confidence of consumers is by 0.8 point up.
*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.

In industry, the favourable assessment of overall economic situation in April did not change compared to March. The assessment of total demand did not change either; the assessment of external demand decreased slightly. According to respondents, stocks increased modestly. For the next three months respondents expect a slight slowdown in favourable development of production activity and employment. For the next three months expectations of total economic situation are lower than in March, for the next six months they are better. Production capacity utilization in industry reached 89.0%. Overall, the confidence indicator balance in industry decreased by 0.7 point, m-o-m, being 2 points down compared to April 2007.

In construction, the assessment of current economic situation increased, m-o-m, in April. The assessment of current total demand decreased slightly. For the period of the next three months respondents expect a favourable development in construction activity and employment to continue. Respondents estimate they have work secured by contracts for 8.5 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are more cautious than in March. Overall, the confidence indicator balance in construction decreased by 1.5 points, m-o-m, to reach the third highest value in its history. It is 4.5 points up, y-o-y.

In trade, favourable assessment of current economic situation continues in April. Similarly, expectations of the economic situation development for the period of the next three as well as six months increased a little. According to respondents, the finished goods stocks recorded a moderate increase. Overall, the confidence indicator balance increased by 0.3 point, m-o-m, and is 2.7 point down, y-o-y.

In selected services, according to respondents, the favourable assessment of current economic situation did not change in April m-o-m. The assessment of demand decreased moderately in April and its expectations for the period of the next three months showed no changes, m-o-m. Expectations of the economic development for the period of the next three as well as six months are higher than in March. Overall, the confidence indicator balance in selected services decreased by 0.4 point, m-o-m, and is 6.7 points down, y-o-y.

The survey taken among consumers in April indicates that, compared to March, consumers expect for the next twelve months slight improvement of both the general economic situation and their own financial standing. In April, the share of consumers expecting a rise in unemployment increased slightly and remains low. The percentage of respondents planning to save money decreased slightly. The consumer confidence indicator decreased by 1.1 point, m-o-m. However, in the year-on-year comparison, it is 0.8 point up.Note

Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail: marie.hormannova@csu.gov.cz
Data source: CZSO business survey, GfK Praha consumer survey
Business and Consumers Surveys are co-financed by grant agreements
of the European Commission DG ECFIN
End of data collection: 18 April 2008
End of data processing: 23 April 2008
Related publication: 1201-07 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
(Publications available also at /1-ep-1 )


Methodological explanatory notes :

Since January 2006, the composite confidence indicator (economic sentiment indicator) is in compliance with the EU methodology presented as a weighted average of seasonally adjusted confidence indicators in industry, construction, trade, selected services and seasonally non-adjusted consumer confidence indicator. Composite business confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction, trade and selected services.
Since January 2006, due to the inclusion of confidence indicator in selected services, a new weighting system has been used : confidence indicator in industry is assigned the weight of 40%, in construction and trade 5% each, in services 30%, and consumer confidence indicator is assigned the weight of 20%. Indicators are presented as basic indices, the base being the average of 2005.
Time series of composite and business confidence indicator are recalculated, using the new weighting system – back to May 2002 (the beginning of the business cycle survey in selected services). The whole time series of base indices are then re-based to the average of 2005; the data are comparable.