Business cycle survey - June 2004
Growth in confidence of entrepreneurs and consumers continues
Publication Date: 25. 06. 2004
Product Code: r-1201-04
In June 2004 the composite confidence indicator balance increased again compared to the previous month. It was positively influenced by both the business and consumer confidence indicator. The most favourable assessment of the situation was made by entrepreneurs in industry and trade; a favourable assessment continued also in construction. In June, the business confidence indicator balance reached the highest value in its history.
In industry (941) 42% of respondents considered their economic situation in June good, 55% satisfactory and 3% bad, which is a better result than in May. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output improved compared to the assessment in May (balance 6 pts. up). The assessment of current foreign demand (order books) for enterprise output improved against May, too (balance 10 pts. up). Finished goods stocks decreased, the respondents say.
The respondents expect increase of production activity in next three months (balance 2 pts. up) and no changes in employment. In next six months to come they expect no changes in their economic situation. All the data seasonally adjusted.
On the whole, the confidence indicator in industry increased by 4 points against the previous month. Compared y-o-y, it is 7 points up on June 2003 and in the long-term comparison it reaches high values.
In construction enterprises (449) the assessment of the current economic situation improved in June (after seasonal adjustment) against May (balance 1 pt. up). The assessment of domestic demand (order books) for enterprise output increased (balance 3 pts. up). The assessment of foreign demand (order books) increased as well (balance 6 pts. up). In next three months the respondents expect the high growth of construction activity to be maintained without further increasing of employment (balance 2 pts. down). The overall confidence indicator in construction has not changed compared to the previous month; in the y-o-y comparison it is 8 pts. up on June 2003.
Of respondents engaged in trade (323) 51% considered in June the economic situation of their enterprises good, 46% corresponding to the season and 3% bad, which is a 5 point increase of the balance in comparison to May (seasonally adjusted). Respondents signal decreased amount of stocks (balance 5 pts. down). Unchanged price development is expected by 75% respondents, 17% expect growth and 8% expect drop, which is a less favourable expectation than in May. In next six months to come 59% of respondents anticipate no changes in the economic situation (the same as in May), 40% predict improvement (39% in May) and 1% expect worsening (2% in May). The overall confidence indicator in trade increased by 5 points when compared to May and is 8 pts. up on June 2003.
In selected services (739) 66% of the respondents assessed their economic situation in June to be good, 33% of them saw the situation adequate to the season and 1% saw it bad, which is better assessment than in May. 39% of the respondents expected a rise in demand for enterprise output (order books), and 57% or 4% of respondents anticipated an unchanged or worse situation, respectively, which is worse expectation than in May. No changes in prices should occur according to 86% of respondents, 12% envisage a rise and 2% a decrease in prices, which is better expectation than in May. A decrease in the number of employees is expected by 36% of respondents, no changes are expected by 55% of them, and 9% of respondents expect an increase. The overall confidence indicator in selected services has not changed.
A survey taken in consumers (1000) in June suggests an improvement of the balance of expectation of the total economic situation and their financial situation in next twelve months . The expected total economic situation balance increased by 4 points and the balance of expected consumers´ financial situation increased by 6 points. The share of consumers expecting an increase of unemployment increased compared to May, and the balance increased by 4 points. The share of consumers intending to save money increased (balance 2 pts. up). The consumers again consider the current situation appropriate for buying consumer durables (balance 3 pts. up). Compared to the last month the overall consumer confidence indicator increased by 2 points and thus reached its highest value since July 2002.
Methodological notes:
Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Source: CZSO business surveys, GfK Praha consumer survey
End of data collection: 21 June 2004
End of data processing: 23 June 2004
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 Czech Statistical Office since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in the data for 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.