Business cycle survey - February 2008

In February 2008, the balance of composite confidence indicator (economic sentiment indicator) increased by 1 point compared to January 2008; namely due to the increase of consumer confidence indicator by 9.3 points. The balance of business indicator dropped by 1 point. Compared to February 2007, the composite confidence indicator balance dropped by 2 points, the confidence of entrepreneurs is 1.6 point down; the confidence of consumers is down by 3.4 points.
*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.

In industry, the assessment of overall economic situation in February did not changed compared to January. The assessment of total demand improved in February; the assessment of external demand was less favourable. According to respondents, stocks slightly increased. For the next three months respondents expect slight slowdown in favourable development of production activity and employment. For the next three as well as six months, expectations of total economic situation are more reserved than in January. Overall, the confidence indicator balance in industry decreased by 0.7 point, m-o-m, but it is 1 point up compared to February 2007.

In construction, the assessment of current economic situation increased, m-o-m, in February, similarly as the assessment of current total demand. For the period of the next three months respondents expect a favourable development in construction works and employment to continue. Respondents estimate they have work secured by contracts for 8.6 months ahead. Expectations of the economic situation development for the period of the next three months are lower than in January, for next six months they are more favourable. Overall, the confidence indicator balance in construction dropped by 1.5 point, m-o-m, to the third highest value in its history and it is 4 points up, y-o-y.

In trade, high assessment of current economic situation increased in February. According to respondents, the finished goods stocks decreased in February (seasonal sales). Expectations of the economic situation development for the period of the next three months decreased slightly, for next six months they are higher. Overall, the confidence indicator balance increased by 0.4 point, m-o-m, in February, showing the same value as in February 2007.

In selected services, according to respondents, the assessment of current economic situation increased slightly in February. However, the assessment of demand and its expectations for the period of the next three months generally decreased, m-o-m, respondents predominantly count on its stability. Expectations of the economic development for the period of the next three as well as six months are almost the same as in January. Overall, the confidence indicator balance in selected services decreased by 1.6 point, m-o-m; it is 6.3 points down, y-o-y.

The survey taken among consumers in February indicates that, compared to January, consumers expect for the next twelve months improvement of both the general economic situation and their own financial standing. In February, the expectations of unemployment improved reaching the second best value in their history; expectations of a decrease in unemployment again prevailed over those of their increase. The percentage of respondents planning to save money increased markedly. The consumer confidence indicator raised by 9.3 points, m-o-m, returning thereby to similar value as in August 2007. In the year-on-year comparison it is 3.4 points down.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: 20 February 2008
End of data processing: 25 February 2008
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 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.