Business cycle survey - March 2006

Balance of composite confidence indicator (indicator of economic sentiment) increased by 0.5 point in March 2006 compared to the previous month. Balance of business indicator increased by 0.2 point. Balance of consumer confidence indicator increased by 1.7 points. Compared to March 2005, composite confidence indicator balance increased by 2.4 points, business confidence indicator balance increased by 1.7 points and consumer confidence indicator balance increased by 5.6 points.

In industry, the confidence indicator balance increased by 1.3 points month-on-month; however, in the year-on-year comparison it is 0.7 points down on March 2005. In construction, the confidence indicator balance increased by 1 point m-o-m and it is 1.5 points up on March 2005. In trade, the confidence indicator balance decreased by 4.7 points but it is 0.3 point up y-o-y. In selected services, the confidence indicator balance decreased by 0.6 point m-o-m, but is 5 points up y-o-y.


In industry, favourable assessment of the current economic situation prevails in March. Assessment of total demand increased compared to the previous month, while the assessment of foreign demand remained unchanged. For next three months, respondents expect no changes in production activity and a slight increase in employment. Stable price development is expected by 78.4% of respondents, 16.9% expect a rise and 4.7 a drop. For next three months, respondents expect no changes in their economic situation and improvement in next six months.

In construction, expressively favourable assessment of current economic situation from previous months decreased in March. Nevertheless, in relation to an expected increase in the demand, respondents expect an increase in the number of employees in next three months. Predominantly, the respondents anticipate no changes in prices; however, 29.5% of respondents will increase their prices. Construction work is secured for 9 months ahead, respondents in construction say. Expectations of economic situation are favourable for next six months.

Among respondents engaged in trade, favourable assessment of current economic situation did not change in March. Expected development of economic situation for next six months decreased. Stocks of finished goods increased, respondents say. Demands on suppliers should, however, increase. 74.2% of respondents expect stable development of the number of employees; sale prices should not rise (85.0% of respondents expect no changes in prices).

In selected services, respondents assess their current economic situation favourably; however, assessment of demand decreased. Respondents, however, expect favourable development of demand in next three months. Respondents expect employment to decrease; prices of services should rise slightly (a price increase is expected by 12.8% of respondents, no changes by 86.7%). Assessment of economic situation is favourable for next three as well as six months.

The survey taken among consumers in March indicates that they expect improvement of both the overall economic situation (balance up by 4.6 points) and their own financial situation (balance up by 1.5 points). Compared to February 2006, the percentage of consumers expecting higher unemployment increased (balance up by 2.1 points). The percentage of the respondents that are going to save money increased by 2.9 points. In March, the consumer confidence indicator increased by 1.7 points and reached the second highest value in its history.

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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
End of data collection: 21 March 2006
End of data processing: 23 March 2006
More information at: 1201-05 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.