Business cycle survey - August 2005

The composite confidence indicator balance as well as the business confidence indicator balance decreased in August 2005 by 1 point m-o-m. The consumer confidence indicator balance decreased by 2 points. In comparison to August 2004, the balance of composite confidence indicator was lower by 2 points; the business confidence indicator balance was lower by 3 points and the balance of consumer confidence indicator was higher by 5 points.


In industry (919 respondents), 44.6% of the respondents considered their economic situation in August good, 52.3% satisfactory and 3.1% bad, which is after seasonal adjustment a higher assessment than in July. The assessment of current total demand (order books) for enterprise output increased compared to the assessment in July (balance 1 point up). The assessment of current foreign demand increased, too (balance 2 points up). Stocks of finished goods increased, the respondents say (balance 5 points up). For next three months 32.3% of respondents expect an increase in the production activity, 60.8% expect no changes and 6.9% decrease, which after seasonal adjustment translates into 1-point decrease of the balance. Respondents also expect the employment to increase (balance 2 points up). For next six months, they further count with favourable development of their economic situation; however, compared to the previous month the balance decreased by 1 point. All the data are seasonally adjusted.
On the whole, the balance of confidence indicator in industry decreased by 2 points compared to the previous month; year-on-year, it is 4 points down on August 2004.
In construction enterprises (562 respondents), 49.0% of the respondents considered the economic situation of their enterprise in August good, 46.9% as satisfactory and 4.1% bad; this is a higher assessment than in July (balance 6 points up). The assessment of current total demand (order books) for enterprise output increased (balance 2 points up). For next three months respondents expect the employment to decrease (balance 4 points down). All the data seasonally adjusted. For next six months 67.0% of the respondents anticipate no changes in economic situation (73.5% in July), 19.1% predict improvement (23.8% in July) and 13.9% expect worsening (2.7% in July). Generally, the balance of confidence indicator in construction did not change month-on-month and it is 1 point down on August 2004.
Of respondents engaged in trade (316 respondents), 43.2% considered the economic situation of their enterprise in August good, 53.7% as corresponding to the season and 3.1% bad. Month-on-month, this translates into no changes in the balance after seasonal adjustment. All in all, trade slightly increased its stock of inventories (balance 1 point up). Unchanged price development is expected by 84.8% of the respondents, while 8.8% expect prices to grow and 6.4% to drop. For next six months, 38.5% of the respondents predict improvement in the economic situation (37.2% in July), 59.7% anticipate no changes (60.7% in July) and 1.8% expect worsening (2.1% in July). The overall balance of confidence indicator in trade increased by 1 point month-on-month and in the year-on-year comparison it is 2 points down on August 2004.
In selected branches of services (788 respondents), 58.1% of the respondents assessed their current economic situation in August as good, 40.4% as corresponding to the season and 1.5% as bad, which was a higher assessment than in July. 35.2% of the respondents expect the demand to rise (order books), while 62.4% anticipate no changes and 2.4% assume that the demand will decrease; this expectation is also higher than in July. According to 95.0% of the respondents no changes in price development should occur, 3.9% envisage a rise in prices and 1.1% a drop. The number of employees is expected to decrease (25.6% of the respondents), remain unchanged (64.6%) or to increase (9.8% of the respondents). The overall balance of confidence indicator in selected branches of services increased by 3 points but in the y-o-y comparison it is 4 points down on August 2004.

The survey taken among consumers (1,000 respondents) in August suggests a decrease in the balance of the indicator of expected overall economic situation (balance 2 points down) as well as in the balance of their financial situation in next twelve months (balance 3 points down). Compared to July 2005, the percentage of consumers expecting higher unemployment increased (balance 9 points up). The percentage of the respondents going to save money increased, too (balance 3 points up). The overall consumer confidence indicator decreased in comparison with the previous month by 2 points; however, in the y-o-y comparison it is 5 points up.

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Note

Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Data source: CZSO business surveys, GfK Praha consumer survey
End of data collection: 22 August 2005
End of data processing: 24 August 2005
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 CZSO since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in 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.