Business cycle survey - November 2005

The composite confidence indicator balance did not change in November 2005 month-on-month. The business confidence indicator balance decreased by 1 point. On the contrary, the consumer confidence indicator balance increased markedly (by 6 points). In comparison to November 2004, the composite confidence indicator balance is by 2 points higher; the business confidence indicator balance remained unchanged and the consumer confidence indicator balance is higher by 11 points.

In industry (903 respondents), 50.7% of the respondents considered their economic situation in November good, 46.7% satisfactory and 2.6% bad, which is after seasonal adjustment slightly better assessment than in October (balance 1 point up). Assessment of current total demand (order books) for enterprise output increased slightly compared to the assessment in October (balance 1 point up). Assessment of current external demand decreased slightly compared to October (balance 1 point down). Stocks of finished goods increased, the respondents say (balance 4 points up). For next three months, 31.4% of respondents expect an increase in the production activity, 60.8% expect no changes and 7.8% a decrease, which translates into a 4-point decrease in the balance from a high value in October. Respondents expect the employment to increase compared to October (balance 5 points up). All the data are seasonally adjusted.
On the whole, the balance of confidence indicator for industry decreased by 3 points compared to the high value in previous month; in terms of year-on-year comparison, it was 3 points down on November 2004, too.

In construction enterprises (550 respondents), 51.2% of the respondents considered the economic situation of their enterprise in November good, 44.9% satisfactory and 3.9% bad, which is after seasonal adjustment a considerably better assessment than in October (balance 7 points up). Assessment of November total demand (order books) for enterprise output decreased compared to October (balance 7 points down). For next three months, respondents expect the employment to increase (balance 2 points up). All the data are seasonally adjusted. For next six months, 72.0% of the respondents anticipate no changes in the economic situation (70.9% in October), 11.4% predict improvement (11.1% in October) and 16.6% expect worsening (18.0% in October); the seasonally adjusted balance increased slightly. Generally, the balance of confidence indicator for construction decreased due to November decrease in demand by 2 points m-o-m; however, y-o-y it is 3 points up.

Among respondents engaged in trade (310 respondents), 54.0% considered the economic situation of their enterprise in November good, 44.1% as corresponding to the season and 1.9% bad. In terms of m-o-m comparison and seasonally adjusted, this translates into a 5-point increase in the balance. On the whole, trade decreased its stock of inventories (balance 4 points down). Unchanged price development is expected by 79.9% of the respondents, while 13.1% expect prices to grow and 7.0% to drop. For next six months, 39.0% of the respondents predict improvement in the economic situation (40.6% in October), 59.6% anticipate no changes (58.1% in October) and 1.4% expect worsening (1.3% in October). For next three months 50.5% of the respondents expect a rise in sales, 41.4% no changes and 8.1% a drop. The overall balance of confidence indicator for trade increased by 2 points m-o-m; in terms of y-o-y comparison, it is 1 point up on November 2004.

In selected services (786 respondents), 55.7% of the respondents assessed their current economic situation in November as good, 43.1% as corresponding to the season and 1.2% as bad, which was a slightly lower assessment than in October. 38.3% of the respondents expect the demand (order books) to rise, while 54.5% anticipate no changes and 7.2% assume that the demand will decrease; these expectations are also slightly lower than in October. According to 92.7% of the respondents no changes in price development should occur, 6.1% envisage a rise in prices and 1.2% a drop. The number of employees is expected to decrease (31.5% of the respondents), remain unchanged (59.8%) or to increase (8.7% of the respondents). The overall balance of confidence indicator for selected services increased by 1 point in November; however, in the y-o-y comparison it is 1 point down.

The survey taken among consumers (1,000 respondents) in November suggests an increase in the balance of the indicator of expected overall economic situation (balance 7 points up) as well as in the balance of their financial situation in next twelve months (balance 4 points up). Compared to October 2005, the percentage of consumers expecting higher unemployment decreased (balance 5 points down). The percentage of the respondents going to save money increased (balance 9 points up). The overall consumer confidence indicator increased by 6 points in comparison to the previous month and it is 11 points up year-on-year.

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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: 22 November 2005
End of data processing: 24 November 2005
More information at: https://csu.gov.cz


Methodological explanatory notes :

The composite confidence indicator is a weighted average of seasonally adjusted confidence indicators for industry, construction, trade, and of the consumer confidence indicator. The composite business confidence indicator is a weighted average of seasonally adjusted confidence indicators for industry, construction and trade. The confidence indicator for industry has a double weight. Since January 2002, the consumer confidence indicator has been composed of four indicators (expected financial situation of consumers, expected overall economic situation, expected total unemployment (with inverted sign) and savings expected in next 12 months). 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 (assessment of total demand, stocks of finished products (with inverted sign) and expected development of production activity). The confidence indicator for construction is the average of two indicators (assessment of total demand and expected development of employment). The confidence indicator for trade is the average of three indicators (assessment of economic situation, stocks (with inverted sign) and 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 (assessment of economic situation, assessment of demand and expected demand). The confidence indicator for selected services is not yet being included in the composite indicators.

The data were derived in a weighted manner: sales were used as weights for industry, trade and services, whereas construction work of contractors and subcontractors was the weight for construction. The observed groups of enterprises account for more than a half of sales (industry) and volume (construction) and for a quarter of sales in trade.