Business cycle survey (in entreprises of industry, construction, etc.) - April

In April 2009, the balance of composite confidence indicator (economic sentiment indicator) increased for the second time since February 2008 by 4.2 point, m-o-m (it was 1.7 point up in March). Business confidence indicator balance increased by 4.5 points and the balance of consumer confidence indicator increased by 3.3 points. However, compared to April 2008, the composite confidence indicator balance decreased by 28.2 points, the confidence of entrepreneurs is 30.6 points down and the confidence of consumers is down by 18.7 points.

In industry, the assessment of current overall economic situation in April further showed a slight decrease compared to March. The assessment of both total and external demand, however, increased slightly. According to respondents, stocks decreased moderately. For the next three months respondents expect recovery in production activity and employment. For the period of the next three as well as six months expectations of total economic situation are also higher than in March. Production capacity utilization in manufacturing industry decreased compared to already low value in January 2009 to reach 74.4%; respondents estimate they have work secured by contracts for 6.3 months ahead (it was 6.1 in January). Overall, in April, the confidence indicator balance in industry increased by 5.4 points, m-o-m, which is, however, 37.3 points down, y-o-y.

The survey on investment activity taken among industrial enterprises suggests that the level of investment in manufacturing industry in 2009 should be lower than in 2008 (approximately by 14%). It refers predominantly to a renewal of production equipment and less to an extension of production capacities and introducing new technologies.

In construction, the assessment of current economic situation in April decreased compared to March. The assessment of current total demand decreased slightly. For the period of the next three months respondents expect a slowdown in the development of construction activity and employment. Respondents estimate that they have work secured by contracts for 7.8 months ahead (it was 8.5 in March). Expectations of the economic situation development for the period of the next three as well as six months are lower than in March. Overall, the confidence indicator balance in construction decreased by 4 points, m-o-m; it is 28 points down, y-o-y.

In trade, assessment of current economic situation in April increased slightly, compared to March. Expectations of the economic situation development for the period of the next three months are lower than in March, for next six months they are, however, higher. According to respondents, in April, the finished goods stocks decreased markedly. Overall, the confidence indicator balance increased by 2.7 points, m-o-m, but it is 15.3 points down, compared to April 2008.

In selected services, according to respondents, the assessment of current economic situation in April increased compared to March. The assessment of demand increased, too; as well as its expectations for the next three months. Expectations of economic situation for the period of the next three as well as six months increased compared to March. Overall, the confidence indicator balance in selected services increased by 5 points, compared to March, but is 24.6 points down, compared to 2008.

The survey taken among consumers in April indicates that, compared to March, consumers expect for the next twelve months an improvement of the overall economic situation and their own financial standing. The share of respondents expecting a rise in unemployment increased slightly, compared to March, and remains high. The percentage of respondents planning to save money increased. The consumer confidence indicator increased by 3.3 points, m-o-m, to fall by 18.7 points, y-o-y.
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 April 2009
End of data processing: 23 April 2009
Related publication: 1201-09 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
(Publications available also at /1-ep-1 )

Methodological explanatory notes :
Since January 2009, the balance of consumer confidence indicator is seasonally adjusted. Time series of consumer and composite confidence indicators are recalculated back and the data are comparable.
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.