Business cycle survey - September 2005

The composite confidence indicator balance increased in September 2005 by 2 points month-on-month. The business confidence indicator balance increased by 2 points too. The consumer confidence indicator balance did not change. In comparison to September 2004, the composite confidence indicator balance was by 1 point higher; the business confidence indicator balance was by 1 point lower and the consumer confidence indicator balance was by 10 points higher.


In industry (918 respondents), 49.9% of the respondents considered their economic situation in September good, 46.7% satisfactory and 3.4% bad, which is after seasonal adjustment a higher assessment than in August. Assessment of current total demand (order books) for enterprise output did not change compared to assessment in August. Assessment of current external demand increased (balance 4 points up). Stocks of finished goods increased, the respondents say (balance 1 point up). For next three months, 32.0% of respondents expect an increase in the production activity, 62.9% expect no changes and 5.1% a decrease, which after seasonal adjustment translates into no changes in the balance. Respondents also expect the employment to increase (balance 3 points up). For next six months, they further count on favourable development of their economic situation, although the balance decreased by 1 point compared to the previous month. All the data are seasonally adjusted.
On the whole, the balance of confidence indicator for industry did not change compared to the previous month; in terms of year-on-year comparison, it was 4 points down on September 2004.
In construction enterprises (567 respondents), 51.8% of the respondents considered the economic situation of their enterprise in September good, 44.5% satisfactory and 3.7% bad, which is the same assessment as in August. Assessment of current total demand (order books) for enterprise output increased (balance 5 points up). For next three months, respondents expect the employment to increase (balance 5 points up). All the data are seasonally adjusted. For next six months, 68.5% of the respondents anticipate no changes in the economic situation (67.0% in August), 18.0% predict improvement (19.1% in August) and 13.5% expect worsening (13.9% in August). Generally, the balance of confidence indicator for construction increased by 4 points month-on-month, which is 7 points up on September 2004.
Among respondents engaged in trade (315 respondents), 43.3% considered the economic situation of their enterprise in September good, 52.6% as corresponding to the season and 4.1% bad. In terms of month-on-month comparison and seasonally adjusted, this translates into no changes in the balance. Overall, trade slightly increased its stock of inventories (balance 1 point up). Unchanged price development is expected by 81.1% of the respondents, while 11.4% expect prices to grow and 7.5% to drop. For next six months, 44.2% of the respondents predict improvement in the economic situation (38.5% in August), 55.0% anticipate no changes (59.7% in August) and 0.8% expect worsening (1.8% in August). The overall balance of confidence indicator for trade increased by 3 points month-on-month, but it is 4 points down year-on-year.
In selected services (785 respondents), 60.5% of the respondents assessed their current economic situation in September as good, 37.6% as corresponding to the season and 1.9% as bad, which was a higher assessment than in August. 36.6% of the respondents expect the demand (order books) to rise, while 59.8% anticipate no changes and 3.6% assume that the demand will decrease; these expectations are also higher than in August. According to 93.4% of the respondents no changes in price development should occur, 4.2% envisage a rise in prices and 2.4% a drop. The number of employees is expected to decrease (27.4% of the respondents), remain unchanged (62.3%) or to increase (10.3% of the respondents). The overall balance of confidence indicator for selected services increased by 2 points and it is 1 point up year-on-year.

The survey taken among consumers (1000 respondents) in September suggests an increase in the balance of the indicator of expected overall economic situation (balance 1 point up) a decrease in the balance of their financial situation in next twelve months (balance 3 points down). Compared to August 2005, the percentage of consumers expecting higher unemployment increased (balance 2 points up). The percentage of the respondents going to save money increased too (balance 7 points up). The overall consumer confidence indicator did not change in comparison to the previous month, but it is 10 points up year-on-year.Note

Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail hormannova@gw.czso.cz
Data source: CZSO business survey, GfK Praha consumer survey
End of data collection: 21 September 2005
End of data processing: 23 September 2005
For more information see: 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.