Business cycle survey - September 2004
Confidence of entrepreneurs continued, consumers´ decreased
Publication Date: 27. 09. 2004
Product Code: r-1201-04
The business confidence indicator balance has not changed in September 2004 . The composite confidence indicator balance decreased due to a marked decrease of the consumer confidence (5 points down) compared to the previous month. However, in terms of year-on-year comparison, the composite confidence indicator balance is 6 points higher than in September 2003.
In industry (940 respondents), 42% of the respondents considered their economic situation in September good, 55% satisfactory and 3% bad, which is a slightly worse result than in August. After seasonal adjustment, the assessment of current total demand (order books) for enterprise output has almost unchanged compared to August (balance 1 point down). The assessment of current foreign demand (order books) for enterprise output decreased compared to the high assessment in August (balance 3 points down). Stocks of finished goods increased, the respondents say.
Respondents expect in next three months production growth (balance 9 points up) and an increase in employment (balance 2 points up). In next six months , the respondents expect their economic situation to improve (balance 3 points up). All the data are seasonally adjusted.
On the whole, the confidence indicator in industry has not changed compared to the previous month. In terms of y-o-y comparison, it is by 11 points higher than in September 2003 and in the long-term comparison it reaches high values.
In construction enterprises (451 respondents), the high assessment of the current economic situation in preceding month (after seasonal adjustment) decreased in September (balance 9 points down). Also the assessment of total demand (order books) for the enterprise output, compared to high assessment in previous months worsened (balance 9 points down). In next three months , the respondents expect a growth of construction activity with a slight increase in employment. The overall confidence indicator due to assessment of demand decreased by 4 points m-o-m; in terms of y-o-y comparison, it is 2 points down on September 2003.
Of respondents engaged in trade (340), 49% considered the economic situation of their enterprises good, 48% as corresponding to the season and 3% bad, which was a 1-point increase of the balance on August (seasonally adjusted). The respondents signal pre-stock of goods in their companies. Unchanged price development is expected by 78% of respondents, 7% expect growth and 15% expect drop. In next six months , 41% of the respondents predict improvement in the economic situation (34% in August), 58% anticipate no changes (66% in August) and 1% expect worsening (0% in August). The overall confidence indicator in trade increased by 5 points m-o-m and 6 points on September 2003.
In selected services (760 respondents), 56% of the respondents assessed their current economic situation in September as good, 42% as corresponding to the season and 2% as bad, which was the same assessment as in August. In total, 38% of the respondents expect a rise in demand (order books), 59% anticipate no changes, and 3% a drop, and these expectations are almost same as in August. According to 84% of the respondents, no changes in price development should occur, 14% 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 49% and an increase is envisaged by 12% of the respondents. The overall confidence indicator in selected services decreased; and it reaches the same value as in September 2003.
A survey taken among consumers (1000 respondents) in September suggests a decrease 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 fell by 7 points and the balance of expected consumers´ financial situation decreased by 3 points. Compared to August, the share of consumers expecting higher unemployment has not changed. The share of respondents with the intention to save money decreased (balance 10 points down); the intention of consumers to buy consumer durables increased (balance 3 points up). Compared to the preceding month, the overall consumer confidence indicator markedly decreased (5 points down). However, in the y-o-y comparison it is 3 points up on September 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 September 2004
End of data processing: 23 September 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.