Business cycle survey - November 2008

In November 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased by 5.1 points m-o-m (it was 5.9 points down in October, m-o-m). Business confidence indicator balance fell by 6.6 points and the balance of consumer confidence indicator was up by 0.7 point. Compared to November 2007, the composite confidence indicator balance dropped by 19.5 points, the confidence of entrepreneurs is 22.7 points down and the confidence of consumers is down by 6.7 points.
*) With the exception of consumer indicator, all the data are calculated from seasonally adjusted balances.

In industry, the assessment of current overall economic situation dropped in November compared to October. In November, the assessment of both total and external demand decreased markedly. According to respondents, stocks did not change. For the next three months respondents expect a slowdown of production activity and decrease in employment. For the next three as well as six months expectations of total economic situation are lower than in October. Overall, the confidence indicator balance in industry decreased by 5.4 points, m-o-m. It is 30.7 points down, y-o-y.

The survey on investment activity taken among industrial enterprises suggests that the level of investment in manufacturing industry in 2009 should be lower than in 2008 (approximately by 5%). It refers namely to a renewal of production equipment; at lesser scale to an extension of production capacities and introducing new technologies.

In construction, the assessment of current economic situation in November decreased, m-o-m. The assessment of current total demand decreased as well. For the period of the next three months respondents, however, expect a favourable development in construction activity and employment. Respondents estimate they have work secured by contracts for 8.9 months ahead. Expectations of the economic situation development for the period of the next three months are slightly higher than in October, for the next six months they are lower. Overall, the confidence indicator balance in construction increased by 1 point, m-o-m, but it is 2 points down, y-o-y.

In trade, assessment of current economic situation in November decreased, m-o-m. Expectations of the economic situation development for the period of the next three months hardly changed, for next six months they are higher compared to October. According to respondents, in November, the finished goods stocks increased. Overall, the confidence indicator balance fell by 3.4 points, m-o-m, and is 14 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased, m-o-m. The assessment of demand and its expectation for the next three months decreased as well. Expectations of economic situation for the period of the next three as well as six months decreased compared to October. Overall, the confidence indicator balance in selected services decreased by 10 points, m-o-m, and is 17 points down, y-o-y.

The survey taken among consumers in November indicates that, compared to October, consumers expect for the next twelve months worsening of the overall economic situation and their own financial standing, but it is less marked than in October. In November, the share of respondents expecting a rise in unemployment increased again. The percentage of respondents planning to save money rose. The consumer confidence indicator increased slightly (by 0.7 points), m-o-m; it is by 6.7 points down, y-o-y.
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 November 2008
End of data processing: 26 November 2008
Related publication: 1201-08 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.