Business cycle survey - October 2004
Confidence of entrepreneurs and consumers without marked changes
Publication Date: 27. 10. 2004
Product Code: r-1201-04
The composite confidence indicator balance as well as the business indicator balance did not change in October 2004 compared to the previous month. The consumer confidence indicator balance slightly increased compared to the previous month. In terms of year-on-year comparison, the business confidence indicator is 2 points higher, the consumer confidence indicator is 9 points higher and the composite confidence indicator is 3 points higher than in October 2003.
In industry (944 respondents), 43% of the respondents considered their economic situation in October good, 54% satisfactory and 3% bad, which is a better result than in September. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output has not changed compared to September. The assessment of current foreign demand (order books) for enterprise output increased compared to September (balance 1 point up). Stocks of finished goods decreased, the respondents say.
Respondents expect in next three months a slight production growth (balance 1 point up) at a slight decrease of employment (balance 1 point down). In next six months , the respondents expect their economic situation to improve slightly, too (balance 1 point up). All the data are seasonally adjusted.
On the whole, the confidence indicator in industry has increased compared to the previous month (balance 1 point up). In terms of y-o-y comparison, it is by 4 points higher than in October 2003 and in the long-term comparison it reaches high values.
In construction enterprises (450 respondents), the assessment of the current economic situation (after seasonal adjustment) increased significantly in October compared to the previous month (balance 19 points up). The assessment of total demand (order books) for the enterprise output decreased compared to September (balance 3 points down). In next three months , the respondents expect growth of construction activity (balance 11 points up) after seasonal adjustment at an increase in employment (balance 4 points up). The overall confidence indicator in construction has not changed compared to the previous month. In terms of y-o-y comparison, it is 2 points down on October 2003, especially due to higher level of demand in the second half of last year.
Of respondents engaged in trade (319 respondents), 52% considered the economic situation of their enterprises in October good, 44% as corresponding to the season and 4% bad, which was a 2-point increase of the balance on September (seasonally adjusted). The respondents still signal pre-stock of goods in their companies. Unchanged price development is expected by 73% of respondents, 12% expect growth and 15% expect drop. In next six months , 34% of the respondents predict improvement in the economic situation (41% in September), 64% anticipate no changes (58% in September) and 2% expect worsening (1% in September). The overall confidence indicator in trade decreased by 3 points m-o-m and increased by 1 point on October 2003.
In selected services (740 respondents), 56% of the respondents assessed their current economic situation in October as good, 42% as corresponding to the season and 2% as bad, which was the same assessment as in September. In total, 39% of the respondents expect a rise in demand (order books), 54% anticipate no changes, and 7% a drop, and these expectations are worse than in September. According to 91% of the respondents, no changes in price development should occur, 7% 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 decreased and is 2 points down on October 2003.
A survey taken among consumers (1000 respondents) in October suggests a slight 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 1 point and the balance of expected consumers´ financial situation increased by 2 points. Compared to September, the share of consumers expecting higher unemployment increased (balance 2 points up). The share of respondents with the intention to save money increased (balance 3 points up). Compared to the preceding month, the overall consumer confidence indicator increased slightly (1 point up) and in the y-o-y comparison it is 9 points up on October 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: 21 October 2004
End of data processing: 25 October 2004
For more information: 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 Czech Statistical Office since May 2002. This is why the time series are not seasonally adjusted. Data for hotels and restaurants are included in the data for 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.