Business cycle survey - June 2007

In June 2007, the balance of composite confidence indicator (economic sentiment indicator) decreased by 0.5 point, compared to the previous month. The balance of business indicator decreased by 1 point. The balance of consumer confidence indicator increased by 1.3 point. Compared to June 2006, the composite confidence indicator balance increased by 1.5 point, the confidence of entrepreneurs is by 2.5 points up; the one of consumers is down by 2.7 points.
In industry, the assessment of current economic situation decreased compared to the previous month . The assessment of aggregate demand decreased as well; the assessment of foreign demand improved, m-o-m. According to respondents, the finished goods stocks decreased slightly. For the period of the next three months, respondents expect increase in production activity. As for the economic situation, respondents’ expectations for the next three months are the same as in May, for the period of the next six months they are lower. All in all, the balance of confidence indicator in industry increased by 0.4 point m-o-m to the highest value from June 2000 and by 5.4 points y-o-y.

In construction, the assessment of current economic situation improved m-o-m. The assessment of the demand decreased. For the period of the next three months, the respondents expect the speed up of construction activity and count on increase of employment. Respondents estimate they have work secured by contracts for 9 months. Expectations of the economic situation development for the period of the next three months are higher; for the next six months they are the same as in May. All in all, the confidence indicator balance in construction did not change m-o-m and is 4 points up y-o-y.
Among respondents engaged in trade, assessment of current economic situation improved slightly compared with May. Expectations of the economic situation development for the period of the next three months decreased compared to May, for the period of the next six months they are higher than in May. According to respondents, the finished goods stocks increased in June. All in all, the confidence indicator balance dropped from its high value by 0.3 point m-o-m to the third highest value in its history which is 5.7 points up y-o-y.

In selected services, assessment of current economic situation decreased slightly in June, according to respondents. Assessment of demand decreased. Expectations of the demand development for the period of the next three months are lower as well. Expectations of the economic situation development for the period of the next three months are lower than in May, for the next six months they are higher. All in all, the confidence indicator balance in selected services decreased by 3 points m-o-m and it is by 2 points down compared to June 2006.

The survey taken among consumers in June indicates, that consumers expect improvement of both the general economic situation and their own financial standing compared to May 2007. The percentage of consumers expecting higher unemployment, decreased further. Percentage of respondents planning to save money moderately increased. The consumer confidence indicator increased by 1.3 point compared to the previous month, but it is by 2.7 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: 21 June 2007
End of data processing: 25 June 2007
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 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.