Business cycle survey - December 2006
Entrepreneurs and consumers looking with optimism to the new year
Publication Date: 29. 12. 2006
Product Code: r-1201-06
The balance of composite confidence indicator (indicator of economic sentiment) increased by 1.4 points in December 2006 compared to the previous month and reached thus the highest value in its history. Similarly, the balance of business indicator increased by 0.9 points and has reached the highest value since February 1993. The balance of consumer confidence indicator increased by 3.5 points. Compared to December 2005, the composite confidence indicator balance increased by 6.3 points, the business confidence indicator balance by 6.9 points and the consumer confidence indicator balance increased by 4.4 points.
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In industry , the confidence indicator balance did not change month-on-month and increased by 7.3 points year-on-year. In construction , the confidence indicator balance did not change
m-o-m either and is up by 7 points y-o-y. In trade , the confidence indicator balance increased by 0.6 points m-o-m and decreased by 4.4. points y-o-y. In selected services , the confidence indicator balance was up by 2.3 points m-o-m and 8 points y-o-y.
In industry , respondents assessed their current economic situation the same as in the previous month . The assessment of total demand increased slightly; the assessment of foreign demand increased. Stocks of finished goods increased, respondents say. For the period of next three months, respondents expect a slight improvement in both production activity and employment. Stable prices are expected by almost 70% of respondents, more than a fifth expect a rise and about a tenth a drop. For the period of both next three and six months , respondents’ expectations of their economic situation are higher. All in all, the balance of confidence indicator in industry reached, as well as in the previous month, its highest value since September 2000.
The survey on investment activity among industrial enterprises suggests that the level of investment in industry in 2007 should be higher than in 2006 (approximately by 8%). It regards both: renewal of original equipment or operation as well as extension of production capacities.
In construction , assessment of the current economic situation decreased in December in comparison to November. The assessment of overall demand decreased, too. Respondents say they have work secured for 9.3 months ahead, on the average. For the period of next three months , the respondents expect continuing of favourable development of both construction activity and employment. Anticipation of no price changes predominates among respondents; almost 16% of them, however, expect a rise in prices. Expectations of economic situation development for the period of next three months are higher, for next six months they are slightly lower.
Among respondents engaged in trade , assessment of the current economic situation did not change m-o-m in December; more than a half of the respondents assessed it as good, over 40% as satisfactory and 6.2% as bad. According to respondents, stock of inventories increased slightly in December. A stable development of the number of employees in the period of next three months is expected by more than three quarters of respondents, more than a tenth expect a rise a drop. Anticipation of no price changes predominates among respondents; only 3.2% of them expect a rise in prices and 12.1% a drop. Expectations of economic situation development for the period of next three months are lower than in November, however, for the period of next six months they are higher.
In selected services , assessment of both the current economic situation and demand by respondents in December increased. Expectations of demand development for the period of next three months increased as well. For the period of next three months , a rise in employment is expected by a quarter of respondents, more than a half expect no changes and 22% a drop. Expectations of economic situation development are, compared to November, higher for the period of next three and slightly lower for next six months . All in all, the confidence indicator in selected services reached the highest value in its history (since May 2002).
The survey taken among consumers in December indicates that consumers expect only a slight improvement of the overall economic situation (balance up by 0.3 point) and an increase in their own financial situation (balance up by 6.4 points). Compared to November 2006, the percentage of consumers expecting higher unemployment decreased. Percentage of the respondents who intend to save money increased.
Porovnání vybraných ukazatelů za jednotlivá odvětví v prosinci 2006 (sezónně neočištěno)
Comparison of selected indicators in individual branches in December 2006 (not seasonally adjusted)
Comparison of selected indicators in individual branches in December 2006 (not seasonally adjusted)
Note
Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail marie.hormannova@csu.gov.cz
Data source: CZSO business survey, GfK Praha consumer survey
End of data collection: 20 December 2006
End of data processing: 27 December 2006
Related publication: 1201-06 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
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. 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 indicators 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 basic indices are then re-based to the average of 2005; the data are comparable.