Business cycle survey - August 2007

In August 2007, the balance of composite confidence indicator (economic sentiment indicator) did not change compared to July 2007. The balance of business indicator decreased slightly (by 0.2 point). The balance of consumer confidence indicator increased by 0.8 point. Compared to August 2006, the composite confidence indicator balance decreased by 1 point, the confidence of entrepreneurs is slightly lower (by 0.3 point); the confidence of consumers is down by 3.7 points.

In industry, the same assessments and expectations as in July prevailed among respondents. This applies to the assessment of aggregate demand, assessment of stocks, and the expectations of production activity and economic situation in next six months. The assessment of the current economic situation remains high in spite of a slight m-o-m decrease . Overall, the balance of confidence indicator in industry did not change m-o-m and increased by 2.3 points y-o-y.

In construction, the assessment of the current economic situation decreased m-o-m so did the assessment of total demand. For the period of the next three months the respondents expect a slowdown of construction activity and still count on rise in employment. Respondents estimate they have work secured by contracts for 8.7 months. Expectations of the economic situation development for the period of the next three months are worse than in July; for the next six months they are slightly better. Overall, the confidence indicator balance in construction decreased by 2 points m-o-m and it is 4 points down y-o-y.

Among respondents engaged in trade, the assessment of the current economic situation improved slightly compared with July. According to respondents, the finished goods stocks did not change in August. Expectations of the economic situation development for the period of the next three as well as six months were higher compared to July. Overall, the confidence indicator balance increased by 2.3 points m-o-m, by which it reached the highest value in its history. It is 8.3 points up y-o-y.

In selected services, the assessment of the current economic situation decreased slightly in August. The assessment of demand did not change and its expectations for the period of the next three months worsened slightly in comparison to July. Expectations of the economic situation development for the period of the next three as well as six months are better than in July. Overall, the confidence indicator balance in selected services decreased by 0.6 point m-o-m and it is by 4.6 points down compared to August 2006.

The survey taken among consumers in August indicates that, compared to July, consumers expect for the next twelve months a slight improvement of both the general economic situation and their own financial standing. Unemployment expectations of consumers are the lowest ever. The percentage of respondents planning to save money decreased. The percentage of consumer who intend to spend was up. The consumer confidence indicator increased by 0.8 point compared to the previous month and it is by 3.7 points down y-o-y.

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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: 21 August 2007
End of data processing: 24 August 2007
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 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.