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

In January 2009, the balance of composite confidence indicator (economic sentiment indicator) decreased by 3.2 points m-o-m (it was 8.6 points down in December, m-o-m). Business confidence indicator balance fell by 2.8 points and the balance of consumer confidence indicator was down by 4.8 points. Compared to January 2008, the composite confidence indicator balance dropped by 30.8 points, the confidence of entrepreneurs is 34.7 points down and the confidence of consumers is down by 15 points. Indicators reached their minimum values over the last almost ten years.

In industry, the assessment of current overall economic situation dropped markedly in January compared to December. The assessment of both total and external demand decreased, too. According to respondents, stocks decreased. 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 December, for next six months they are already more favourable. Production capacity utilization in manufacturing industry decreased markedly compared to October 2008 and reached 76.1%; which is the lowest value since October 1993; respondents estimate they have work secured by contracts for 6.1 months ahead. Overall, the confidence indicator balance in industry decreased by 1.6 point (it was 13 points down, m-o-m, in December) and it is 44.3 points down, y-o-y.

In construction, the assessment of current economic situation in January decreased, m-o-m. However, the assessment of current total demand increased. For the period of the next three months respondents expect slight improvement in the development of construction activity and decrease in employment. Respondents estimate they have work secured by contracts for 7.9 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are lower than in December. Overall, the confidence indicator balance in construction decreased by 1 point, m-o-m; it is 14 points down, y-o-y.

In trade, assessment of current economic situation in January decreased, m-o-m. Expectations of the economic situation development for the period of the next three as well as six months decreased markedly compared to December. According to respondents, in January, the finished goods stocks did not change. Overall, the confidence indicator balance fell by 4.7 points, m-o-m, and is 21 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation increased slightly, m-o-m. The assessment of demand and its expectation for the next three months, however, decreased. Expectations of economic situation for the period of the next three as well as six months decreased compared to December. Overall, the confidence indicator balance in selected services decreased by 4.3 points, m-o-m, and is 27.6 points down, y-o-y.

The survey taken among consumers in January indicates that, compared to December, consumers expect for the next twelve months worsening of the overall economic situation and a slight decrease in their own financial standing. In January, 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 4.8 points, m-o-m; it is by 15 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: 20 January 2009
End of data processing: 23 January 2009
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 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.