Business cycle survey - January 2007

The balance of composite confidence indicator (indicator of economic sentiment) increased by 0.6 point in January 2007 compared to the previous month and reached the highest value in its history. The balance of business indicator increased by 0.5 point and reached the highest value in its history, too. The balance of consumer confidence indicator increased by 0.7 points. Compared to January 2006, the composite confidence indicator balance increased by 5.5 points, the confidence of entrepreneurs was by 7 points up, and the one of consumers was by 0.6 point lower.

In industry, the assessment of current economic situation increased slightly compared to the previous month . The assessment of total demand increased; the assessment of foreign demand decreased, compared to the high value in December. Stocks of finished goods increased, respondents say. For next three months, respondents expect growth of production activity and a decrease in employment. For next three months, respondents expect an increase in their economic situation; for next six months they count on no changes. Production capacity utilization in industry increased slightly compared to the previous quarter and reached 88.4%, which is the highest value in its history. All in all, the balance of confidence indicator in industry increased by 0.7 point m-o-m and by 8 points y-o-y.
In construction, assessment of the current economic situation increased m-o-m. The assessment of overall demand increased, too. For the period of next three months, the respondents expect a slowdown in construction activity and reduction in the number of employees. Anticipation of no price changes predominates among respondents; almost a fifth of them, however, expect a rise in prices. Respondents say they have work secured for 9.4 months ahead, on the average. Expectations of economic situation development for the period of next three months are higher, for next six months they are lower than in December. All in all, the balance of confidence indicator in construction decreased by 1.5 points m-o-m; however, it is 7 points up y-o-y.
Among respondents engaged in trade, assessment of the current economic situation increased slightly m-o-m in January. Expectations of economic situation development for the next three as well as six months increased, too. According to respondents, stock of inventories decreased slightly in January. All in all, the balance of confidence indicator increased by 3 points m-o-m and by 2 points y-o-y.
In selected services, assessment of both the current economic situation and demand decreased in January according to respondents. Expectations of demand development for the period of next three months, however, increased. Expectations of economic situation development are almost unchanged for the period of next three as well as six months, compared to December. All in all, the confidence indicator in selected services increased by 0.3 point m-o-m and was by 6.6 points up y-o-y.

The survey taken among consumers in January indicates that consumers expect improvement of the overall economic situation and a slight decrease in their own financial situation. Compared to December 2006, the percentage of consumers expecting higher unemployment, increased slightly. Percentage of the respondents who intend to save money increased, too. All in all, the consumer confidence indicator increased by 0.7 point m-o-m and was by 0.6 point down y-o-y.

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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
End of data collection: 19 January 2007
End of data processing: 24 January 2007
Related publication: 1201-07 Business Cycle Survey in Enterprises of Industry, Construction,Trade and Selected Services

Methodological explanatory notes :

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 consumer confidence indicator. 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 indicators 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 basic indices are then re-based to the average of 2005; the data are comparable.