Business cycle survey - July 2010

Confidence in domestic economy increased m-o-m in July. The composite confidence indicator (economic sentiment indicator) increased by 2.4 points. Confidence of entrepreneurs increased, namely in industry and selected services. Confidence of consumers increased slightly as well (by 0.2 point), m-o-m. Compared to a low value in July 2009, the composite confidence indicator is 15.3 points up.

Business confidence indicator increased by 3 points in July compared to June. Among entrepreneurs, confidence increased in industry and in selected services; in construction and trade it decreased. Compared to low values in the last year, the confidence of entrepreneurs is 16.2 points up.

In industry, the assessment of current overall economic situation in July increased compared to June as well as the assessment of total demand. Production capacity utilization in manufacturing industry increased in July too and reached 81.9%. Respondents estimate they have work secured by contracts for 8.1 months ahead. Most important barrier of production still is insufficient demand, even though compared to previous quarter it is stated by less respondents (52.8%). According to respondents, stocks hardly changed. For next three months, respondents expect increase in production activity by steady employment. Expectations of general economic situation for the next three as well as six months are higher than in June. Overall, in July, the confidence in industry increased by 2.4 points, m-o-m; compared to low values in last year it is 22.7 points up.

In construction, the assessment of current economic situation improved markedly in July compared to June. Assessment of total demand decreased. For the period of the next three months respondents expect an improvement of construction activity by unchanged employment, compared to June. Respondents estimate that they have work secured by contracts for 9 months ahead. Expectations of the economic situation development for the next three months are lower than in June, for next six months they are higher. Overall, the confidence in construction decreased by 2 points, m-o-m, due to low demand and it is 1.5 point down, y-o-y.

In trade, the assessment of current economic situation in July increased slightly, compared to June. According to respondents, in July, the finished goods stocks increased. Expectations of the economic situation development for the period of the next three months are slightly lower than in June, for next six months they are slightly higher. In general, the confidence in trade decreased by 1.7 points, m-o-m, and it is 0.3 point up y-o-y.

In selected services, according to respondents, the assessment of current economic situation and the assessment of demand increased markedly in July compared to June. Expectations of demand for the next three months decreased. For the period of the next three as well as six months expectations of total economic situation are the same as in June. Most important barrier of production remains, in spite of a decrease compared to last quarter, insufficient demand (25.9% of respondents say). Overall, the confidence in selected services increased by 5.4 points, compared to June; while in the y-o-y comparison it is 13 points up.

Consumer confidence indicator increased by 0.2 point compared to June, to be 11.7 points up, compared to low value in July 2009. The survey taken among consumers in July indicates that consumers expect for the next twelve months a slight decrease in the overall economic situation and in their own financial standing. The share of respondents expecting rises in unemployment did not change in July. The percentage of respondents planning to save money increased.

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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 July 2010
End of data processing: 22 July 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 May 2010, the results are in compliance with the programme of business and consumer surveys in the EU processed according to the new CZ-NACE classification (national version of NACE Rev. 2), which replaced the former classification CZ-NACE (OKEČ, the national version of NACE Rev. 1.1). The changes apply to all data except the consumer confidence indicator. Exhaustive information on the introduction of this classification is available at: /csu/czso/klasifikace_ekonomickych_cinnosti_-cz_nace- . The whole time series are recalculated back, data are comparable and available at /csu/czso/kpr_ts .

Since January 2009, 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 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.

Text not edited for language.

Published: 26.07.2010
The data are valid as of the release date of the publication.