Business cycle survey - December 2008

In December 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased by 8.9 points m-o-m (it was 5.1 points down in November, m-o-m). Business confidence indicator balance fell by 8.9 points and the balance of consumer confidence indicator was down by 8.7 point. Compared to December 2007, the composite confidence indicator balance dropped by 27.3 points, the confidence of entrepreneurs is 31.2 points down and the confidence of consumers is down by 11.7 points. Indicators reached their minimum values over the last nine years.



*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.


In industry, the assessment of current overall economic situation dropped in December compared to November. The assessment of both total and external demand decreased markedly. According to respondents, stocks increased. For the next three months respondents expect a slowdown of production activity and decrease in employment. For the next three months expectations of total economic situation are lower than in November, for next six months they are still lower but only slightly. Overall, the confidence indicator balance in industry decreased by 13 points, m-o-m, reaching the lowest value since March 1999. It is 43 points down, y-o-y.

In construction, the assessment of current economic situation in December increased slightly, m-o-m. However, the assessment of current total demand decreased. For the period of the next three months respondents expect a slowdown in the development of construction activity and decrease in employment. 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 months are lower than in November, for the next six months they remain almost unchanged. Overall, the confidence indicator balance in construction decreased by 8 points, m-o-m; it is 13 points down, y-o-y.

In trade, assessment of current economic situation in December decreased, m-o-m. Expectations of the economic situation development for the period of the next three as well as six months decreased compared to November. According to respondents, in December, the finished goods stocks increased. Overall, the confidence indicator balance fell by 4.3 points, m-o-m, and is 15.3 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased, m-o-m. The assessment of demand and its expectation for the next three months decreased as well. Expectations of economic situation for the period of the next three as well as six months decreased compared to November. Overall, the confidence indicator balance in selected services decreased by 4.3 points, m-o-m, and is 21 points down, y-o-y.

The survey taken among consumers in December indicates that, compared to November, consumers expect for the next twelve months worsening of the overall economic situation and their own financial standing. In December, the share of respondents expecting a rise in unemployment increased again. The percentage of respondents planning to save money decreased. The consumer confidence indicator decreased by 8.7 points, m-o-m; it is by 11.7 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: 19 December 2008
End of data processing: 23 December 2008
Related publication: 1201-08 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.