Business cycle survey - June 2005
The overall confidence has not changed month-on-month
Publication Date: 27. 06. 2005
Product Code: r-1201-05
The composite confidence indicator balance as well as the business confidence indicator balance did not change in June 2005 compared to the previous month. The consumer confidence indicator balance increased by 1 point. In comparison to June 2004, the balance of composite confidence indicator was lower by 4 points; the business confidence indicator balance was lower by 7 points and the balance of consumer confidence indicator was higher by 9 points.
In industry (928 respondents), 37.7% of the respondents considered their economic situation in June good, 59.0% satisfactory and 3.3% bad, which is after seasonal adjustment the same result as in May. The assessment of current total demand (order books) for enterprise output decreased compared to the assessment in May (balance 1 point down). The assessment of current foreign demand did not change. Stocks of finished goods increased, the respondents say (balance 3 points up). In next three months, the respondents expect the production activity to speed up (balance 4 points up) and demand to increase (balance 3 points up). The employment will not change, the respondents say. In next six months, they expect their economic situation to improve (balance 3 points up). All the data are seasonally adjusted.
On the whole, the balance of confidence indicator in industry did not change compared to the previous month. However, compared year-on-year, it is 7 points down on June 2004.
In construction enterprises (565 respondents), 50.4% of the respondents considered the economic situation of their enterprise in June good, 44.7% as satisfactory and 4.9% bad; this is better assessment than in May, however, after seasonal adjustment the balance decreased by 4 points. The assessment of current total demand (order books) for enterprise output decreased (balance 1 point down). For next three months respondents expect after seasonal adjustment the employment declining (balance 3 points down). In next six months , 31.5% of the respondents predict improvement in the economic situation (60.5% in May), 66.6% anticipate no changes (37.4% in May) and 1.9% expect worsening (2.1% in May). Generally, the balance of confidence indicator in construction decreased by 2 points month-on-month and it is 10 points down on June 2004, which was caused by high reference basis in last year.
Of respondents engaged in trade (323 respondents), 45.2% considered the economic situation of their enterprise in June good, 51.3% as corresponding to the season and 3.5% bad. Month-on-month, this translates into no changes in the balance after seasonal adjustment. All in all, trade increased its stock of inventories (balance 1 point up). Unchanged price development is expected by 88.5% of the respondents, while 5.2% expect prices to grow and 6.3% to drop. In next six months , 37.8% of the respondents predict improvement in the economic situation (44.7% in May), 61.5% anticipate no changes (53.9% in May) and 0.7% expect worsening (1.4% in May). The overall balance of confidence indicator in trade decreased by 1 point month-on-month. In year-on-year comparison it is 4 points down on June 2004.
In selected branches of services (779 respondents), 49.6% of the respondents assessed their current economic situation in June as good, 48.7% as corresponding to the season and 1.7% as bad, which was a worse assessment than in May. 32.6% of the respondents expect the demand to rise (order books), while 62.8% anticipate no changes and 4.6% assume that the demand will decrease; this expectation is worse than in May. According to 92.4% of the respondents no changes in price development should occur, 6.3% envisage a rise in prices and 1.3% a drop. The number of employees is expected to decrease (29.2% of the respondents), remain unchanged (61.4%) or increase (9.4% of the respondents). The overall balance of confidence indicator in selected branches of services decreased by 7 points and in the y-o-y comparison it is 11 points down on June 2004.
An investment activities survey suggests that investments should grow slightly in manufacturing industry in 2005 (2% up). Main factors influencing investment decisions include demand and financial sources, the respondents say. Renewal and extension of existing capacities as well as construction of new ones are areas invested in.
The survey taken among consumers (1,000 respondents) in June suggests no changes in the balance of the indicator of expected overall economic situation and a slight increase in the balance of their financial situation in next twelve months . Compared to May 2005, the percentage of consumers expecting higher unemployment increased (balance 5 points up). The percentage of the respondents going to save money increased, too (balance 5 points up). The overall consumer confidence indicator increased in comparison with the previous month (1 point up) and in the y-o-y comparison it is 9 points up.
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: 20 June 2005
End of data processing: 23 June 2005
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.