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

Confidence in domestic economy increased in November. The composite confidence indicator (economic sentiment indicator) improved by 3.1 points, m-o-m, due to increasing confidence of both consumers and entrepreneurs. Among entrepreneurs, confidence increased in industry, trade and selected services, m-o-m. Compared to November 2008, the composite confidence indicator was 4.7 points down (it was 12.9 points down y-o-y in October).

Business confidence indicator increased by 2.3 points in November compared to October. Among entrepreneurs, confidence increased in industry, trade, and in selected service and, by contrast, dropped in construction, m-o-m. Compared to November 2008, the confidence of entrepreneurs is 7.3 points down (it was 16.2 down y-o-y in October).

In industry, the assessment of current overall economic situation in November improved compared to October. Assessment of total and external demand improved, too. According to respondents, stocks increased. For the next three months respondents’ expectations regarding production activity and employment increased. Also expectations of general economic situation for the period of the next three as well as six months are higher than in October. Overall, in November, the confidence in industry increased by 1.6 point, m-o-m; it is the same as in November 2008.

The survey on investment activity taken among industrial enterprises suggests that the level of investment in manufacturing industry in 2009 should be reduced by more than a fifth compared to 2008. Respondents expect a slight y-o-y decrease in investment for 2010 (approximately by 3%). Investment will predominantly flow to a renewal of production equipment and lesser funds will be allocated to an extension of production capacities and purchase of new technologies.

In construction, the assessment of current economic situation in November decreased compared to October. Assessment of current total demand has not changed. For the period of the next three months respondents expect sustaining development of construction activity and a decrease in employment, compared to October. Respondents estimate that they have work better secured by contracts (for 8.7 months ahead). Expectations of the economic situation development for the period of the next three moths are lower than in October, for next six months they are higher. Overall, the confidence in construction decreased by 1.5 point, m-o-m, and it is 35 points down, y-o-y.

In trade, assessment of current economic situation in November improved, compared to October. According to respondents, in November, the finished goods stocks increased slightly. Expectations of the economic situation development for the period of the next three as well as six months are higher than in October. Overall, the confidence in trade was 3.7 points up, m-o-m, and it is 13.6 points down, y-o-y (it was 20.7 points down y-o-y in October).

In selected services, according to respondents, the assessment of current economic situation increased in November compared to October. The assessment of demand increased as well and so did its expectations for the next three months. For the period of the next three months expectations of total economic situation are almost the same as in October, for the period of the next six months they are higher. Overall, the confidence in selected services increased by 3.7 points, compared to October; while in the y-o-y comparison it is 11.3 points down.

Consumer confidence indicator increased by 6.3 points, m-o-m, to be 5.5 points up, compared to low values in 2008. The survey taken among consumers in November indicates that, compared to October, consumers expect for the next twelve months an increase in the overall economic situation as well as in their own financial standing. The share of respondents expecting rises in unemployment decreased, compared to October. The percentage of respondents planning to save money did not change.

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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: 19 November 2009
End of data processing: 23 November 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.