Business cycle survey - February 2004
Confidence of entrepreneurs grows, confidence of consumers falls
Publication Date: 26. 02. 2004
Product Code: r-1201-04
In February 2004 the balance of business indicator increased compared to the previous month. Its value was positively influenced primarily by the confidence indicator in industry. The consumer confidence indicator dropped, namely due to the influence of all its parts. On the whole, the composite confidence indicator balance remained unchanged compared to the previous month.
In industry (944) 35% of respondents considered their economic situation in February good, 62% satisfactory and 3% bad, which is a bit worse result than in January. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output improved compared to January (balance 12 pts. up). The assessment of current foreign demand (order books) for enterprise output improved as well (balance 11 pts. up). Finished goods stocks increased (balance 2 pts. up), the respondents say.
The respondents expect acceleration of production activity in next three months (balance 5 pts. up), an improvement in employment (balance 10 pts. up) and an improvement in their total economic situation in next six months to come (balance 1 pt. up). (All the data seasonally adjusted.)
On the whole, the confidence indicator in industry increased on the previous month. Compared y-o-y, it is 3 points up on February 2003.
In construction enterprises (465) the good assessment of the current economic situation from previous months was maintained in February (after seasonal adjustment), however, against January there was a decrease. The assessment of domestic demand (order books) for enterprise output decreased (balance 14 pts. down). However, the respondents expect improvement of employment in next three months (balance 13 pts. up). The overall confidence indicator in construction slightly decreased compared to the previous month, but remains on a long-term favourable level.
Of respondents engaged in trade (317) 25% considered in February the economic situation of their enterprises good, 73% corresponding to the season and 2% bad, which is a 5 points decrease of the balance in comparison to January (seasonally adjusted). Respondents signal a rise in the amount of stocks (balance 3 pts. up). Unchanged price development is expected by 81% respondents, 14% expect growth and 5% expect drop. 69% of respondents anticipate no changes in the economic situation in next six months to come (67% in January), 26% predict improvement (24% in January) and the remaining 5% expect worsening (9% in January). The overall confidence indicator in trade remained unchanged when compared to January.
In selected services (779) 66% of the respondents assessed their economic situation in February to be good, 33% of them saw the situation adequate to the season and 1% saw it bad (the same as in January). 33% of the respondents expected a rise in demand for enterprise output (order books), and 54% or 13% of respondents anticipated an unchanged or worse situation, respectively, which is better expectation than in January. No changes in prices should occur according to 72% of respondents, 24% envisage a rise and 4% a decrease in prices. A decrease in the number of employees is expected by 36% of respondents, no changes are expected by 50% of them, and 14% of respondents expect an increase. The overall confidence indicator in selected services slightly increased.
A survey taken in consumers (1000) in February suggests a worsening of the balance of assessment of the total economic situation and their financial situation in next twelve months . The expected total economic situation balance decreased by 4 points and the balance of expected consumers’ financial situation decreased by 7 points. The share of consumers expecting an increase of unemployment increased compared to January, and the balance increased by 6 points. The share of consumers intending to save money decreased (balance 3 pts. down). The overall consumer confidence indicator decreased.
For the period from February 2003 to February 2004 the consumer confidence indicator balance went 13 pts. down, while the balance of business indicator was stable.
Methodological notes:
Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Source: CZSO business surveys, GfK Praha consumer survey
End of data collection: 20 February 2004
End of data processing: 24 February 2004
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 Czech Statistical Office since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in the data for 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.