Business cycle survey - March 2008

In March 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased slightly (by 0.1 point) compared to February 2008. Business confidence indicator balance decreased by 0.6 point, the balance of consumer confidence indicator increased by 1,7 point. Compared to March 2007, the composite confidence indicator balance dropped by 3.1 points, the confidence of entrepreneurs is 3.3 points down; the confidence of consumers is down by 2.6 points.
*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.

In industry, the assessment of overall economic situation in March did not change compared to February. The assessment of total demand decreased slightly in March; the assessment of external demand increased. According to respondents, stocks decreased moderately. For the next three months respondents expect a slight slowdown in favourable development of production activity and employment. For the next three months expectations of total economic situation are better than in February, for the next six months they are lower. Overall, the confidence indicator balance in industry decreased by 0.6 point, m-o-m, being 1.6 points down compared to March 2007.

In construction, the assessment of current economic situation decreased, m-o-m, in March. In contrast, the assessment of current total demand increased. For the period of the next three months respondents expect a favourable development in employment to continue. Respondents estimate they have work secured by contracts for 8.4 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are more favourable than in February. Overall, the confidence indicator balance in construction increased by 2.5 points, m-o-m, to reach the highest value in its history. It is 6.5 points up, y-o-y.

In trade, high assessment of current economic situation decreased slightly in March. According to respondents, the finished goods stocks did not change in March. Expectations of the economic situation development for the period of the next three as well as six months decreased slightly, yet it still shows high values. Overall, the confidence indicator balance decreased by 1 point, m-o-m, and is 1 point down to March 2007.

In selected services, according to respondents, the assessment of current economic situation little decreased in March. The assessment of demand hardly changed in March and its expectations for the period of the next three months decreased slightly, m-o-m. Expectations of the economic development for the period of the next three as well as six months are lower than in February. Overall, the confidence indicator balance in selected services decreased by 1 point, m-o-m; it is 7.6 points down, y-o-y.

The survey taken among consumers in March indicates that, compared to February, consumers expect for the next twelve months improvement of both the general economic situation and namely their own financial standing. In March, the expectations of unemployment reached the third best value in their history; expectations of a decrease in unemployment again prevailed over those of their increase. The percentage of respondents planning to save money decreased. The consumer confidence indicator raised by 1.7 point, m-o-m, reaching the highest value since March 2007. In the year-on-year comparison it is 2.6 points down.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: 20 March 2008
End of data processing: 26 March 2008
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 seasonally non-adjusted 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.