Business cycle survey - April 2010

Confidence in domestic economy increased m-o-m in April. The composite confidence indicator (economic sentiment indicator) increased by 3.4 points. Among entrepreneurs, confidence increased in industry, trade, and in selected services; in construction it decreased. Confidence of consumers increased by 5.2 points, m-o-m. Compared to a low value in April 2009, the composite confidence indicator is 14 points up.

Business confidence indicator increased by 2.9 points in April compared to March. Among entrepreneurs, confidence increased in industry, trade, and in selected services; in construction it decreased. Compared to low values in the last year, the confidence of entrepreneurs is 13.8 points up.

In industry, the assessment of current overall economic situation in April did not change compared to March. Assessment of total and external demand increased significantly. Production capacity utilization in manufacturing industry increased in April too and reached 80.1%. Respondents estimate they have work secured by contracts for 7 months ahead. Most important barrier of production still is insufficient demand, even though compared to previous quarter it is stated by less respondents (56.8%). According to respondents, stocks decreased. Respondents’ expectations regarding production activity and general economic situation for the next three months are the same as in March, for the period of the next six months they are lower. Overall, in April, the confidence in industry increased by 5.3 points, m-o-m; compared to low values in last year it is 25.3 points up.
The survey on investment activity suggests that respondents in manufacturing industry expect a slight decrease (by 3 %) of investment in 2010 compared to 2009. It refers predominantly to a renewal of production equipment and less to an extension of production capacities and introducing new technologies.

In construction, the assessment of current economic situation improved in April compared to March. Assessment of total demand decreased slightly. For the period of the next three months respondents expect an improvement of construction activity compared to March, expectations of employment are cautious. Respondents estimate that they have work secured by contracts for 9.1 months ahead. Expectations of the economic situation development for the period of the next three as well as six months are higher than in March. Overall, the confidence in construction decreased by 3 points, m-o-m, and it is 9 points down, y-o-y.
In trade, assessment of current economic situation in April increased, compared to March. According to respondents, in April, the finished goods stocks increased too. Expectations of the economic situation development for the period of the next three as well as six months are higher than in March. In general, the confidence in trade increased by 1.4 point, m-o-m, and it is 6 points down y-o-y.
In selected services, according to respondents, the assessment of current economic situation did not change in April compared to March. The assessment of demand increased; its expectations for the next three months decreased. For the period of the next three as well as six months expectations of total economic situation are higher than in March. Most important barrier of production remains, in spite of a decrease compared to last quarter, insufficient demand (25.8% of respondents say). Overall, the confidence in selected services increased by 1 point, compared to March; while in the y-o-y comparison it is 5.6 points up.

Consumer confidence indicator increased by 5.2 points compared to March, to be 14.7 points up, compared to low value in April 2009. The survey taken among consumers in April indicates that consumers expect for the next twelve months an increase in the overall economic situation and a slight improvement in their own financial standing. The share of respondents expecting rises in unemployment decreased, compared to March. The percentage of respondents planning to save money increased.

Note
Contact: Marie Hörmannová, phone (+420) 274052049,
e- mail: marie.hormannova@czso.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 April 2010
End of data processing: 22 April 2010
Related publication: 1201-10 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
(Publications available also at /csu/czso/katalog-produktu )

Methodological explanatory notes :
Since January 2009, the balance of consumer confidence indicator is seasonally adjusted. Time series of consumer and composite confidence indicators are recalculated back and the data are comparable.
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 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.

Published: 26.04.2010
The data are valid as of the release date of the publication.