Business cycle survey - July 2008

In July 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased by 0.9 point m-o-m (it was 1.8 points down in June, m-o-m). Business confidence indicator balance fell by 1.3 point and the balance of consumer confidence indicator was by 0.5 point up. Compared to July 2007, the composite confidence indicator balance dropped by 6.3 points, the confidence of entrepreneurs is 6.7 points down and the confidence of consumers is down by 5 points.


*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.


In industry, the assessment of current overall economic situation decreased in July compared to June. The assessment of total demand decreased in July too, like the assessment of external demand. According to respondents, stocks increased modestly. For the next three months respondents expect a slight improvement of production activity and employment. For the next three as well as six months expectations of total economic situation are lower than in June. Production capacity utilization in manufacturing industry decreased compared to the previous quarter and reached 88.2%; respondents estimate they have work secured by contracts for 8.9 months ahead. Overall, the confidence indicator balance in industry decreased by 1.6 point, m-o-m, being 8.6 points down, y-o-y.

In construction, the assessment of current economic situation in July increased, m-o-m. The assessment of current total demand decreased. For the period of the next three months respondents expect a slight slowdown in the development of construction activity and continuing favourable development in employment. Respondents estimate they have work secured by contracts for 8.4 months ahead. Expectations of the economic situation development for the period of the next three months are lower than in June, for the next six months they are higher. Overall, the confidence indicator balance in construction decreased 1.5 point, m-o-m, but it still reaches one of the highest values in its history. It is 4.5 points up, y-o-y.

In trade, assessment of current economic situation in July did not change, m-o-m. Expectations of the economic situation development for the period of the next three months did not change, for next six months they increased slightly. According to respondents, in July, the finished goods stocks increased. Overall, the confidence indicator balance decreased by 0.6 points, m-o-m, and is 6.3 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation increased slightly, m-o-m. Assessment of demand decreased, its expectations for next three months hardly changed. Expectations of economic situation for the period of the next three months slightly decreased, for the period of next six months they remained almost unchanged. Overall, the confidence indicator balance in selected services dropped by 1 point, m-o-m, and is 6 points down, y-o-y.

The survey taken among consumers in July indicates that, compared to June, consumers expect for the next twelve months slight improvement of the overall economic situation and their own financial standing as well. In July, the share of respondents expecting a rise in unemployment increased. The percentage of respondents planning to save money increased. The consumer confidence indicator increased by 0.5 points, m-o-m, but it is by 5 points 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
Business and Consumers Surveys are co-financed by grant agreements of the European Commission DG ECFIN
End of data collection: 18 July 2008
End of data processing: 23 July 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.