Business cycle survey - March 2005
Confidence of consumers increased, confidence of entrepreneurs decreased slightly
Publication Date: 25. 03. 2005
Product Code: r-1201-05
The composite confidence indicator balance did not change in March 2005 compared to the previous month; the business confidence indicator balance decreased by 1 point and the consumer confidence indicator balance, on the contrary, increased by 2 points. In comparison to March 2004, the business confidence indicator balance was higher by 1 point, the balance of consumer confidence indicator by 19 points and the balance of composite confidence indicator by 5 points.
In industry (929 respondents), 39% of the respondents considered their economic situation in March good, 58% satisfactory and 3% bad, which is after seasonal adjustment a worse result than in February (balance 3 points down). The assessment of current total demand (order books) for enterprise output decreased compared to the assessment in February (balance 5 points down). The assessment of current foreign demand decreased, too (balance 8 points down). Stocks of finished goods did not change, the respondents say. In next three months, the respondents expect the production activity to speed up (balance 4 points up) and employment to increase (balance 2 points up). In next six months, they expect their economic situation to remain unchanged. All the data are seasonally adjusted.
On the whole, the balance of confidence indicator in industry did not change month-on-month. Compared year-on-year, the balance is the same as in March 2004.
In construction enterprises (549 respondents), the assessment of the current economic situation in March decreased compared to February (balance 11 points down, seasonally adjusted). The assessment of current total demand (order books) for enterprise output decreased, too (balance 2 points down). In next three months , the respondents expect the construction activity to speed up (balance 15 points up) with the employment growing slower than it is usual for this season (seasonally adjusted balance decreased by 4 points). In next six months, the respondents expect their economic situation to improve (balance 14 points up) – all seasonally adjusted. Generally, the balance of confidence indicator in construction decreased by 3 points month-on-month and it is the same as in March 2004.
Of respondents engaged in trade (312 respondents), 44% considered the economic situation of their enterprise in March good, 52% as corresponding to the season and 4% bad. Month-on-month, this translates into a decrease in the balance by 3 points after seasonal adjustment. All in all, trade did not change its stock of inventories. Unchanged price development is expected by 82% of the respondents, while 6% expect prices to grow and 12% to drop. In next six months , 37% of the respondents predict improvement in the economic situation (26% in February), 58% anticipate no changes (69% in February) and 5% expect worsening (the same as in February). The overall balance of confidence indicator in trade did not change in comparison to February; however, it was 5 points up on March 2004.
In selected branches of services (775 respondents), 57% of the respondents assessed their current economic situation in March as good, 41% as corresponding to the season and 2% as bad, which was a worse assessment than in February. 33% of the respondents expect the demand to rise (order books), while 64% anticipate no changes and 3% assume that the demand will decrease; this expectation is better than in February. According to 93% of the respondents, no changes in price development should occur, 4% envisage a rise in prices and 3% a drop. The number of employees is expected to decrease (26% of the respondents), remain unchanged (64%) or to increase (10% of the respondents). The overall balance of confidence indicator in selected branches of services decreased by 2 points and in the y-o-y comparison it is the same as in March 2004.
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: 21 March 2005
End of data processing: 23 March 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.