Business cycle survey - January 2005
Confidence of both entrepreneurs and consumers still high
Publication Date: 27. 01. 2005
Product Code: r-1201-05
The composite confidence indicator balance decreased in January 2005 compared to the previous month, which was caused by a decrease in the business confidence indicator balance. The consumer confidence indicator balance increased. However, in the year-on-year comparison, the business confidence indicator was higher by 6 points, the consumer confidence indicator by 16 points and the composite confidence indicator by 7 points.
In industry (936 respondents), 45% of the respondents considered their economic situation in January good, 52% satisfactory and 3% bad, which is a better result than in December. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output decreased compared to the assessment in December (balance 2 points down). The assessment of current foreign demand decreased, too (balance 1 point down). Stocks of finished goods increased, the respondents say (balance 4 points up).
In next three months, the respondents expect the production activity to slacken off (balance 5 points down) and the employment to decrease (balance 3 points down). In next six months , however, they expect their economic situation to get better (balance 3 points up). All the data are seasonally adjusted.
On the whole, the confidence indicator in industry decreased by 4 points month-on-month. Compared year-on-year, the indicator is by 3 points up on January 2004.
In construction enterprises (552 respondents), the assessment of the current economic situation (after seasonal adjustment) in January is even more favourable than in December (balance 16 points up). The assessment of current total demand (order books) for enterprise output increased (balance 5 points up). In next three months , the respondents expect the construction activity to slow down (balance 3 points down) with the employment decreasing, too (balance 4 points down) – all seasonally adjusted. Generally, the confidence indicator in construction increased by 1 point month-on-month, due to favourable assessment of the current total demand. When compared to January 2004 it is 7 points up and it reached the highest value in its history, i.e. since February 1993.
Of respondents engaged in trade (317 respondents), 50% considered the economic situation of their enterprise in January good, 49% as corresponding to the season and 1% bad. Month-on-month, this translates into an increase in the balance by 6 points. All in all, trade decreased its stock of inventories (balance 7 points down, seasonally adjusted). Unchanged price development is expected by 82% of the respondents, while 5% expect prices to grow and 13% to drop. In next six months , 24% of the respondents predict improvement in the economic situation (41% in December), 73% anticipate no changes (57% in December) and 3% expect worsening (2% in December). The overall confidence indicator in trade has not changed in comparison to December, but was 10 points up on January 2004.
In selected branches of services (730 respondents), 60% of the respondents assessed their current economic situation in January as good, 39% as corresponding to the season and 1% as bad, which was a slightly better assessment than in December. 22% of the respondents expect the demand to rise (order books), while 62% anticipate no changes and 16% think that the demand will decrease; these expectations are worse than in December. According to 82% of the respondents, no changes in price development should occur, 15% envisage a rise in prices and 3% a drop. The number of employees is expected to decrease (37% of the respondents), remain unchanged (51%) or to increase (12% of the respondents). The overall confidence indicator in selected branches of services decreased by 5 points and in the y-o-y comparison it is also by 5 points lower than in January 2004.
The survey taken among consumers (1,000 respondents) in January suggests an increase in the balance of the indicator of expected overall economic situation (+7 points) and improvement in the balance of their financial situation (+1 point) in next twelve months . Compared to December 2004, the percentage of consumers expecting higher unemployment increased (balance 3 points up). The percentage of the respondents going to save money increased (balance 6 points up). The overall consumer confidence indicator increased in comparison with the previous month (3 points up) and in the y-o-y comparison it is 16 points up on January 2004. In the long-term comparison the indicator thus reached the highest value since June 2002.
Note
Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Data source: CZSO business surveys, GfK Praha consumer survey
End of data collection: 21 January 2005
End of data processing: 25 January 2005
For more information see: https://csu.gov.cz
Methodological explanatory notes :
The composite confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction, trade, and of the consumer confidence indicator. The composite business confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction and trade. The confidence indicator in industry has a double weight. Since January 2002, the consumer confidence indicator has been composed of four indicators (expected financial situation of consumers, expected total economic situation, expected total unemployment (with inverted sign) and savings expected in 12 months to come). Since January 2003, the confidence indicators have been presented as basic indices; the base being the average of 1995.
The branch confidence indicators are constructed as averages of seasonally adjusted weighted business cycle balances. The business cycle balance is the percentage difference between the responses “growth (+)” and “fall (-)”. The confidence indicator for industry is the average of seasonally adjusted balances of three indicators (the assessment of total demand, stocks of final production (with inverted sign) and the expected development of production activity). The confidence indicator for construction is the average of two indicators (the assessment of total demand and the expected development of employment). The confidence indicator for trade is the average of three indicators (the assessment of economic situation, stocks (with inverted sign) and the expected development of economic situation). The business cycle survey in selected services has been conducted by the CZSO since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in selected services. The time series are converted and the data are comparable. The confidence indicator for selected services is the average of three indicators (the assessment of economic situation, the assessment of demand and expected demand). The confidence indicator for selected services is not being included into composite indicators, yet.
The data above were derived in a weighted manner: sales were used as weights for industry, services and trade, whereas construction work of contractors and subcontractors was the weight for construction. The responding groups of enterprises account for more than a half of sales (industry) and volume (construction) and for a quarter of sales in trade.