Business cycle survey - September 2008

In September 2008, the balance of composite confidence indicator (economic sentiment indicator) decreased by 3.1 points m-o-m (it was 1 point down in August, m-o-m). Business confidence indicator balance fell by 3.4 points and the balance of consumer confidence indicator was down by 1.1 point. Compared to September 2007, the composite confidence indicator balance dropped by 10.3 points, the confidence of entrepreneurs is 11.8 points down and the confidence of consumers is down by 3.8 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 slightly in September compared to August. In September, the assessment of both total and external demand decreased. According to respondents, stocks decreased slightly too. For the next three months respondents expect a slowdown of production activity and decrease in employment. For the next three months expectations of total economic situation are lower than in August, for next six months respondents count on improvement of their economic situation. Overall, the confidence indicator balance in industry decreased by 6 points, m-o-m. It is 17.3 points down, y-o-y.

In construction, the assessment of current economic situation in September increased slightly, m-o-m. The assessment of current total demand decreased. For the period of the next three months respondents, however, expect an increase in the development of construction activity and continuing favourable development of employment. Respondents estimate they have work secured by contracts for 9.2 months ahead. Expectations of the economic situation development for the period of the next three months are slightly higher than in August, for the next six months they are lower. Overall, the confidence indicator balance in construction decreased by 0.5 point, m-o-m, but it still reaches high values. It is 5.5 points up, y-o-y.

In trade, assessment of current economic situation in September decreased, m-o-m. Expectations of the economic situation development for the period of the next three months decreased slightly, for the next six months they did not change. According to respondents, in September, the finished goods stocks decreased slightly. Overall, the confidence indicator balance fell by 1.3 points, m-o-m, and is 9 points down, y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased slightly, m-o-m. Both the assessment of demand and its expectations for the next three months decreased slightly, too. Expectations of economic situation for the period of the next three months increased modestly, for the period of the next six months they decreased. Overall, the confidence indicator balance in selected services decreased by 1 point, m-o-m, and is 8 points down, y-o-y.

The survey taken among consumers in September indicates that, compared to August, consumers expect for the next twelve months moderate improvement of the overall economic situation and worsening of their own financial standing. In September, the share of respondents expecting a rise in unemployment decreased slightly. The percentage of respondents planning to save money decreased as well. The consumer confidence indicator decreased by 1.1 point, m-o-m; it is by 3.8 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: 19 September 2008
End of data processing: 23 September 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.