Business cycle survey - June 2006
Entrepreneurs´ optimism
Publication Date: 27. 06. 2006
Product Code: r-1201-06
Balance of composite confidence indicator (indicator of economic sentiment) increased by 1.5 points in June 2006 compared to the previous month and reached the highest value in its history, i.e. since January 1998. Balance of business indicator increased by 2.2 points and also reached the highest value in its history, i.e. since February 1993 (or since May 2002 after inclusion of services indicator). Balance of consumer confidence indicator decreased by 1.4 points. Compared to June 2005, the composite confidence indicator balance increased by 7.2 points, business confidence indicator balance by 8.6 points and consumer confidence indicator balance by 1.6 points.
* * *
In industry , the confidence indicator balance increased by 1.3 points month-on-month and in the year-on-year comparison it is 7.0 points up on June 2005. In construction , the confidence indicator balance decreased by 0.5 points m-o-m; it is 3.0 points up on June 2005. In trade , the confidence indicator balance increased by 2.7 points and it is 3.0 points up y-o-y. In selected services , the confidence indicator balance increased by 3.6 points m-o-m and it is 12.6 points up y-o-y.
In industry , favourable assessment of the current economic situation did not change in June . The assessment of total demand increased compared to the previous month; the assessment of foreign demand increased slightly. Stocks of finished goods increased, respondents say. For next three months, respondents expect production activity to speed up and employment to rise. Stable price development is expected by 82.4% of respondents, 14.5% expect a rise and 3.1% a drop. Respondents expect improvement of their economic situation in next three as well as six months. All in all, the confidence indicator in industry increased again and reached its highest value since January 2001.
In construction , favourable assessment of current economic situation continued in June. The assessment of total demand did not change; assessment of external demand increased. For next three months, the respondents expect stabilised development of the number of employees (balance 1 point down) and of construction activity (balance decreased by 2 points from its previous high value). Predominantly, the respondents anticipate no changes in prices; however, 17.0% of respondents expect an increase in prices. Respondents say they have work secured for 9.7 months ahead. Expectations of economic situation development for next six months are favourable.
Among respondents engaged in trade , assessment of current economic situation did not change in June. Expected development of economic situation for next six months is favourable, balance increased by 8 points. According to respondents, stock of inventories did not change in June. 76.4% of respondents expect stable development of the number of employees, 14.4% expect a rise and 9.2% a drop. A rise in prices is expected by 6.7% of respondents, 86.3% expect no changes and 7.0% a decrease. Due to the expected improvement of economic situation, the confidence indicator in trade increased in June.
In selected services , respondents assess their current economic situation favourably. Assessment of demand did not change in June. Expectations of development of the demand for next three months are favourable. 13.9% of respondents expect a rise in employment in next three months, 55.6% expect no changes and 30.5% expect the number of employees to drop. Expectations of economic situation are favourable for both next three and six months . All in all, the confidence indicator in selected services increased and reached the second highest value in its history (since May 2002).
The survey taken among consumers in June indicates that (in comparison with the high favourable assessment in May) they expect decrease of both the overall economic situation (balance down by 3.3 points) and their own financial situation (balance down by 1.2 points). Compared to May 2006, the percentage of consumers expecting higher unemployment increased (balance up by 2.7 points). Percentage of the respondents, who intend to save money increased by 1.8 points. All in all, the consumer confidence indicator in June decreased by 1.4 points compared to May; however, it reached the high value of 2.2 points.
Porovnání vybraných ukazatelů za jednotlivá odvětví v červnu 2006
Comparison of selected indicators in individual branches in June 2006
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 June 2006
End of data processing: 23 June 2006
More information at: 1201-06 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 is being used : confidence indicator in industry has 40% weight, in construction and trade it is 5% each, in services 30% and consumer confidence indicator has 20% weight. Indicators are presented as basic indices, with the average of 2005 as a base.
Time series of composite and business confidence indicators are recalculated by the new weighting system – back to May 2002 (the beginning of the business cycle survey in selected services). Whole time series of basic indices are then recalculated to the average of 2005; data are comparable.