Business cycle survey - October 2020

The composite confidence indicator (economic sentiment indicator) – in the basis index form - decreased by 4.5 percentage points to 86.4, m-o-m. There is a dominant effect of the decreasing consumer confidence indicator by 11.6 percentage points to 86.0 – it is the lowest value in the last six months. Business confidence indicator decreased by 3.0 percentage points to 86.5 (m-o-m).  Economic sentiment indicator, business confidence indicator and consumer confidence indicator have significantly lower values, y-o-y.

In the comparison with another sectors, the confidence indicator in industry increased, m-o-m. The confidence indicator rises by 1.0 point to 91.5. In October, compared with the previous month, for the fourth month in a further reduced share of entrepreneurs assessing their current total demand, such as insufficient Current for the third time in the form of a reduced share of entrepreneurs expecting a period of three months, growth in production activity. The stock of finished products has hardly changed. In October, we further reduce the share of industrial companies expecting an improvement in their overall economic situation for a production period of three and six months. The main barrier to production growth is insufficient demand, which was mentioned by approximately 35% of respondents. The confidence in the industrial sector is slightly lower, y-o-y.

The utilization of production capacities of enterprises in the manufacturing industry reached 83% in October, which is more than in the previous quarter. Respondents estimate they have work secured by contracts for 12.3 months.

In the construction sector, confidence decreased compared to September. The confidence indicator fell by 1.2 points to 110.4. The share of entrepreneurs evaluating their current demand for construction work as insufficient increased, m-o-m. As in September, construction entrepreneurs estimate that the current number of employees will not change in the next three months. As in the previous quarter, the main barriers to output growth remain staff shortages (around 35% of respondents) and insufficient demand (around 25% of respondents). Compared to October last year, confidence in the construction sector is significantly lower.

In trade, confidence declined slightly. The confidence indicator decreased by 0.3 points to 97.8 compared to September. The share of entrepreneurs evaluating the overall economic situation as well decreased, m-o-m. Expectations concerning the economic situation for the next three months remain unchanged. The stock of goods has decreased. The confidence in trade is higher, y-o-y.

Confidence of entrepreneurs in selected services (including the banking sector) decreased significantly. The confidence indicator fell by 7.7 points to 77.2. All sub-indicators contributed to the decline in the composite indicator. The assessment of the overall economic situation decreased the most. Also, in October, in contrast to the previous month, the share of respondents negatively evaluating the current total demand prevailed, and the share of entrepreneurs expecting an improvement for the next three months also decreased significantly. The main barrier to production growth is insufficient demand, which was mentioned by approximately 34% of respondents. The confidence in selected services is significantly lower, y-o-y.

Consumer confidence indicator fell in October, m-o-m. The confidence indicator fell by 11.6 points (the second-largest m-o-m decline since the beginning of the survey) to 86.0. Consumer concerns about the deterioration in the overall economic situation increased significantly compared to September. In a month-on-month comparison, consumers are also more concerned about the deterioration of their financial situation. The intention to save has decreased. Concerns about rising prices have risen. The number of consumers worried about rising unemployment in the next twelve months rose sharply in October. The consumer confidence is significantly lower, y-o-y.

After the release of the October News Releases, the title was corrected on the very same day, correcting the typo from the original wording "The decrease in confidence comes after three months" to "The decrease in confidence comes after five months".

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Notes:
Responsible manager: Juraj Lojka, Director of Business Statistics Coordination and Business Cycle Surveys Department, tel. +420731439291,  e-mail: juraj.lojka@csu.gov.cz
Contact person: Jiri Obst, Head of Business Cycle Surveys Unit, tel. +420604815440, e-mail: jiri.obst@csu.gov.cz
Data source: CZSO business survey, Data Collect consumer survey (https://www.datacollect.cz)
End of data collection: October 19, 2020
Next News Release: November 24, 2020

This press release wasn´t edited for language.

Business and Consumers Surveys are co-financed by grant agreements of the European Commission DG ECFIN.