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

Confidence in domestic economy decreased slightly in October. The composite confidence indicator (economic sentiment indicator) decreased by 0.6 point, m-o-m, due to decreasing confidence of both consumers and entrepreneurs. Among entrepreneurs, confidence increased only in selected services, m-o-m. Compared to October 2008, the composite confidence indicator was 12.9 points down.

Business confidence indicator decreased by 0.5 point in October compared to September. Among entrepreneurs, confidence increased only in selected services; in industry, trade, and in construction it dropped. Compared to October 2008, the confidence of entrepreneurs is 16.2 points down.

In industry, the assessment of current overall economic situation in October increased compared to September. Assessment of total and external demand decreased slightly. According to respondents, stocks decreased. Production capacity utilization in manufacturing industry increased due to better assessment of production activity in October and reached 79.1% (75.5% in July). Respondents estimate they have work secured by contracts for 6.3 months ahead. For the next three months respondents’ expectations regarding production activity and employment decreased. Also expectations of general economic situation for the period of the next three as well as six months are lower than in September. Overall, in October, the confidence in industry decreased for the first time after seven months (by 3 points), m-o-m; it is 7 points down, y-o-y.

In construction, the assessment of current economic situation in October decreased compared to September, as well as the assessment of current total demand. For the period of the next three months respondents expect slight improvement in the development of construction activity and employment, compared to September. Respondents estimate that they have work secured by contracts for 8.3 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are higher than in September. Overall, the confidence in construction decreased by 0.5 point, m-o-m, and it is 32.5 points down, y-o-y.

In trade, assessment of current economic situation in October decreased, compared to September. According to respondents, in October, the finished goods stocks increased. Expectations of the economic situation development for the period of the next three months are higher than in September, for the period of next six months they are lower. Overall, the confidence in trade decreased by 2.7 points, m-o-m, and it is 20.7 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation increased in October compared to September. 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 lower than in September, for the period of the next six months they are the same. Overall, the confidence in selected services increased by 3.3 points, compared to September; while in the y-o-y comparison it is 25 points down.

Consumer confidence indicator decreased by 1.3 point, m-o-m, to increase by 0.2 point, compared to low values in 2008. The survey taken among consumers in October indicates that, compared to September, 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 rises in unemployment remained the same, compared to September. The percentage of respondents planning to save money increased slightly.

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 October 2009
End of data processing: 23 October 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.