Business cycle survey - November 2004
Confidence of entrepreneurs and consumers increased
Publication Date: 26. 11. 2004
Product Code: r-1201-04
The composite confidence indicator balance increased in November 2004 compared to the previous month, which was caused by the increase of both the business indicator balance and the consumer confidence indicator balance. In terms of year-on-year comparison, the business confidence indicator was 4 points higher, the consumer confidence indicator 8 points and the composite confidence indicator 5 points higher than in November 2003.
In industry (943 respondents), 41% of the respondents considered their economic situation in November good, 56% satisfactory and 3% bad, which is a slightly worse result than in October. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output decreased now compared to the assessment in October (balance 1 point down). The assessment of current foreign demand decreased as well (balance 3 points down). Stocks of finished goods decreased, the respondents say.
Respondents expect in next three months a decrease of production activity (balance 3 points down) at unchanged employment. In next six months , the respondents expect their economic situation not to change. All the data are seasonally adjusted.
On the whole, the confidence indicator in industry has decreased by 1 point compared to the previous month. In terms of y-o-y comparison, it is by 4 points higher than in November 2003 and in the long-term comparison it still reaches high values.
In construction enterprises (537 respondents), the assessment of the current economic situation (after seasonal adjustment) increased again in November compared to the assessment in October (balance 8 points up). The assessment of total demand (order books) for the enterprise output increased, too (balance 10 points up). In next three months , the respondents expect slowdown of construction activity (balance 9 points down) after seasonal adjustment at a decrease in employment (balance 3 points down). The overall confidence indicator in construction has increased by 4 points compared to the previous month. In terms of y-o-y comparison, it is 5 points up on November 2003.
Of respondents engaged in trade (316 respondents), 50% considered the economic situation of their enterprises in November good, 46% as corresponding to the season and 4% bad, which was a 4-point decrease of the balance in the month-on-month comparison (seasonally adjusted). On the whole, the stock of goods in trade decreased (after seasonal adjustment). Unchanged price development is expected by 83% of respondents, 6% expect growth and 11% expect drop. In next six months , 39% of the respondents predict improvement in the economic situation (34% in October), 58% anticipate no changes (64% in October) and 3% expect worsening (2% in October). The overall confidence indicator in trade increased by 1 point m-o-m and increased by 5 points on November 2003.
In selected services (746 respondents), 61% of the respondents assessed their current economic situation in November as good, 37% as corresponding to the season and 2% as bad, which was a better assessment than in October. In total, 38% of the respondents expect a rise in demand (order books), 54% anticipate no changes, and 8% a drop, and these expectations are worse than in October. According to 88% of the respondents, no changes in price development should occur, 10% envisage a rise in prices and 2% a drop. Decreasing numbers of employees are expected by 39% of the respondents, no changes are anticipated by 51% and an increase is envisaged by 10% of the respondents. The overall confidence indicator in selected services has slightly increased. In the y-o-y comparison it is 10 points down on November 2003 when the indicator reached markedly high value, though.
A survey taken among consumers (1000 respondents) in November suggests an increase in the balance of indicator of expected overall economic situation and their financial situation in next twelve months . The balance of expected overall economic situation rose by 2 points and the balance of expected consumers´ financial situation increased by 5 points. Compared to October, the share of consumers expecting higher unemployment increased (balance 1 point up). The share of respondents with the intention to save money increased (balance 4 points up). Compared to the preceding month, the overall consumer confidence indicator increased (2 points up) and in the y-o-y comparison it is 8 points up on November 2003.
Note
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: 22 November 2004
End of data processing: 24 November 2004
For more information see: https://csu.gov.cz
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.