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

Confidence in domestic economy increased slightly in July. The composite confidence indicator (economic sentiment indicator) increased, namely by 0.8 point, m-o-m. Growing overall confidence came from an increase in the confidence of entrepreneurs, mainly in industry. Confidence of consumers, however, decreased, compared to June. Compared to July 2008, the composite confidence indicator was 23 points down.

Business confidence indicator increased by 1.5 point in July compared to June. Among entrepreneurs, the confidence increased most in industry and in selected services. In trade, the confidence did not change and in construction it dropped. Compared to July 2008 the confidence of entrepreneurs is, however, lower by 26 points.

In industry, the assessment of current overall economic situation in July hardly changed compared to June. Assessment of total demand increased slightly and the assessment of external demand improved, too. According to respondents, stocks decreased. For the next three months respondents’ expectations regarding production activity and employment are more favourable than in June. For the period of the next three months expectations of total economic situation are the same as in June, for the next six months they are higher. Production capacity utilization in manufacturing industry increased slightly in July, compared to a low value in April 2009, to reach 75.5%; respondents estimate they have work secured by contracts for 6.5 months ahead (it was 6.3 in April). Overall, in July, the confidence in industry increased for the fifth time in a row (by 2 points), m-o-m; but it is 25.7 points down, y-o-y.
In construction, the assessment of current economic situation in July decreased compared to June. The assessment of current total demand decreased, too. For the period of the next three months respondents expect a slight slowdown in the development of construction activity and do not count on any increase in employment. Respondents estimate that they have work secured by contracts for 8.6 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are higher than in June. Overall, the confidence in construction decreased by 2 points, m-o-m; it is 35 points down y-o-y when it was reaching highest values.
In trade, assessment of current economic situation in July improved, compared to June. Expectations of the economic situation development for the period of the next three as well as six months are lower than in June. According to respondents, in July, the finished goods stocks increased. Overall, the confidence in trade did not change, m-o-m, and it is 18 points down, y-o-y.
In selected services, according to respondents, the assessment of current economic situation decreased slightly in July compared to June. The assessment of demand increased as well as its expectations for the next three months. Expectations of the economic situation for the period of the next three as well as six months increased compared to June. Overall, the confidence in selected services increased by 1.7 points, compared to June; while in the y-o-y comparison it is 26.3 points down.

Consumer confidence indicator decreased by 2 points, m-o-m, to fall by 11 points, y-o-y. The survey taken among consumers in July indicates that, compared to June, consumers expect for the next twelve months a decrease in the overall economic situation as well as in their own financial standing. The share of respondents expecting a rise in unemployment increased, compared to June. The percentage of respondents planning to save money did not change.
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: 21 July 2009
End of data processing: 24 July 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.