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

In May 2009, the balance of composite confidence indicator (economic sentiment indicator) increased for the third in a row, namely by 0.2 point, m-o-m (it was 4.2 points up in April and 1.7 point up in March). Business confidence indicator balance decreased by 0.9 point and the balance of consumer confidence indicator increased by 4.5 points. However, compared to May 2008, the composite confidence indicator balance decreased by 25.5 points, the confidence of entrepreneurs is 29.2 points down and the confidence of consumers is down by 10.2 points.

In industry, the assessment of current overall economic situation in May increased slightly compared to April. Already poor assessment of both total and external demand did not change. According to respondents, stocks decreased slightly. For the next three months respondents expect slight recovery in production activity and no changes in employment. For the period of the next three months expectations of total economic situation are higher than in April, for the next six months they are lower. Overall, in May, the confidence indicator balance in industry increased by 1.6 points, m-o-m, which is, however, 33.7 points down, y-o-y.

In construction, the assessment of current economic situation in May increased a bit compared to April. The assessment of current total demand, however, decreased. 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 8.4 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are higher than in April. Overall, the confidence indicator balance in construction decreased by 5 points, m-o-m; it is 33 points down, y-o-y.

In trade, assessment of current economic situation in May decreased slightly, compared to April. Expectations of the economic situation development for the period of the next three as well as six months are lower than in April. According to respondents, in May, the finished goods stocks increased slightly. Overall, the confidence indicator balance decreased by 1.7 points, m-o-m, and it is 15.3 points down, compared to May 2008.

In selected services, according to respondents, the assessment of current economic situation in May did not change compared to April. The assessment of demand decreased markedly; its expectations for the next three months increased a little. Expectations of economic situation for the period of the next three months increased compared to April, for the next six months they are lower. Overall, the confidence indicator balance in selected services decreased by 3.4 points, compared to April and it is 25 points down, y-o-y.

The survey taken among consumers in May indicates that, compared to April, consumers expect for the next twelve months an improvement of the overall economic situation and a slight improvement of their own financial standing. The share of respondents expecting a rise in unemployment hardly changed, compared to April, and remains high. The percentage of respondents planning to save money increased. The consumer confidence indicator increased by 4.5 points, m-o-m, to fall by 10.2 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: 19 May 2009
End of data processing: 22 May 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.