Business cycle survey - February 2007

In February 2007, the balance of composite confidence indicator (indicator of economic sentiment), compared to the previous month, decreased by 0.4 point to the second highest value in its history. The balance of business indicator decreased by 0.8 point to the third highest value in its history. The balance of consumer confidence indicator increased by 0.9 points. Compared to February 2006, the composite confidence indicator balance increased by 5 points, the confidence of entrepreneurs is by 5.5 points up, and the one of consumers is up by 2.6 points.

In industry, the assessment of current economic situation increased compared to the previous month . The assessment of total demand decreased slightly; the assessment of foreign demand did not change. According to respondents, stocks of finished goods decreased. In comparison with the very high value in the previous month, respondents expect a slowdown of production activity in next three months and a slight increase in employment. For next three as well as six months, the expectations of economic situation are lower than in January. All in all, the balance of confidence indicator in industry decreased by 1.7 points m-o-m, but increased by 6.3 points y-o-y.
In construction, assessment of the current economic situation further slightly increased m-o-m. The assessment of overall demand increased as well. For the period of next three months, the respondents expect a rise in construction activity and predominantly count on no changes in prices; almost a third of them, however, expects a rise in prices. Respondents estimate they have work secured for 9.2 months ahead, on the average. Expectations of economic situation development for next three months are almost the same as in January, for next six months they are higher. All in all, the balance of confidence indicator in construction decreased slightly (by 0.5 point) m-o-m as a result of employment development; however, due to favourable winter conditions, it is 4.5 points up y-o-y.
Among respondents engaged in trade, assessment of the current economic situation increased when compared with January. Expectations of economic situation development for the next three as well as six months increased, too. According to respondents, stock of inventories decreased in February (as a result of seasonal sales). All in all, the balance of confidence indicator increased by 3.4 points m-o-m, however in the y-o-y comparison it is by 0.3 point lower than in February 2006, when it reached its highest value.
In selected services, assessment of the current economic situation decreased in February according to respondents. Assessment of demand increased. Expectations of demand development for the period of next three months are, however, slightly lower. Expectations of economic situation development are the same as in January for the period of next three months, and higher for next six months. All in all, the confidence indicator in selected services decreased by 0.3 point m-o-m but was by 5.7 points up y-o-y.
The survey taken among consumers in February indicates, that consumers evaluated present time as the right time for making greater purchases. However, they expect a worsening of both the overall economic situation and their own financial situation. Compared to January 2007, the percentage of consumers expecting higher unemployment, increased slightly. Percentage of the respondents who intend to save money increased markedly. All in all, the consumer confidence indicator increased by 0.9 point m-o-m and was by 2.6 points up 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
End of data collection: 20 February 2007
End of data processing: 23 February 2007
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.