Business cycle survey - January 2008

In January 2008, the balance of composite confidence indicator (economic sentiment indicator) increased by 1.6 point compared to December 2007; due to the increase in both business and consumer confidence indicator. The balance of business indicator increased by 0.7 point. The balance of consumer confidence indicator increased by 4.7 points. Compared to January 2007, the composite confidence indicator balance dropped by 3.4 points, the confidence of entrepreneurs is 1.4 point down; the confidence of consumers is down by 11.8 points.
*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.

In industry, the assessment of overall economic situation increased slightly in January. The assessment of total demand was less favourable in January; the assessment of external demand increased. According to respondents, stocks slightly dropped. For the next three months respondents expect favourable development in production activity and employment to continue. For the next three as well as six months, expectations of economic situation are higher than in December. Production capacity utilization in industry decreased slightly compared to its record value from the previous quarter and reached 88.8%. Overall, the confidence indicator balance in industry decreased slightly (by 0.3 point), m-o-m, showing the same value as in January 2007.

In construction, the assessment of current economic situation decreased slightly, m-o-m, in January. On the other hand, the assessment of current total demand increased. For the period of the next three months respondents expect a favourable development of construction works and employment to continue. Respondents estimate they have work secured by contracts for 9 months ahead. Expectations of the economic situation development for the period of the next three months are lower than in December, for next six months they are slightly higher. Overall, the confidence indicator balance in construction did not change, m-o-m, reaching the highest value in its history again; it is 5 points up, y-o-y.

In trade, high assessment of current economic situation continued in January, even though it decreased compared to December. According to respondents, also the finished goods stocks decreased in January. Expectations of the economic situation development for the period of the next three (time of seasonal sales) as well as six months are favourable. Overall, the confidence indicator balance increased by 1 point in January. It still reaches high values and is 3 points up, y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased in January. The assessment of demand increased, m-o-m, like its expectations for the period of the next three months. Also the expectations of the economic development for the period of the next three as well as six months are more favourable than in December. Overall, the confidence indicator balance in selected services increased by 2.3 points, m-o-m; it is 5 points down compared to January 2007.

The survey taken among consumers in January indicates that, compared to December, consumers expect for the next twelve months slight improvement of both the general economic situation and their own financial standing. In January, also the expectations of unemployment improved and returned to long-term favourable values. The percentage of respondents planning to save money, however, dropped. The consumer confidence indicator increased by 4.7 points, m-o-m. However, in the year-on-year comparison it is 11.8 points down.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: 23 January 2008
End of data processing: 25 January 2008
Related publication: 1201-07 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
(Publications available also at /1-ep-1 )

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 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.