Business cycle survey - October 2011

Overall confidence in domestic economy improved m-o-m in October after drops in previous months. The composite confidence indicator (economic sentiment indicator) increased by 3.2 points compared to September, due to an increase in the confidence of both entrepreneurs and consumer. Confidence of entrepreneurs increased by 3.3 points, m-o-m; confidence of consumers increased by 2.7 points, m-o-m. Compared to October 2010, the composite confidence indicator is 1.4 point down; if compared to its values during recession (in second half of 2008 and in 2009), it is however higher.

Business confidence indicator increased by 3.3 points in October after a marked decrease in previous month. Confidence increased in industry, trade, and in selected services; in construction it increased slightly and remains very low. The confidence of entrepreneurs is 0.1 point up y-o-y.

In industry, the assessment of current overall economic situation hardly changed in October. The assessment of current total as well as foreign demand decreased. According to respondents, stocks decreased as well. Production capacity utilization in manufacturing industry decreased slightly in October and reached 83.6%; respondents estimate they have work secured by contracts for 7.3 months, which is slightly less than in the previous quarter. Most important barrier of production still is insufficient demand; it was stated by almost half of respondents. For next three months, respondents expect a rise in the development of production activity by almost stable employment. Expectations of general economic situation development for the next three as well as six months are higher than in September. All in all the confidence in industry increased by 3 points due to a more favourable expectation of production activity development; compared to October 2010 it is 2 points down.

In construction, the assessment of current economic situation decreased m-o-m in October. Still low assessment of total demand improved a bit. For the period of the next three months respondents expect a slowdown in the development of construction activity by almost stable employment. Respondents estimate that they have work secured by contracts for 8.1 months ahead. Expectations of the economic situation development for the next three as well as six months are lower than in September. Overall, low confidence in construction increased by 1 point m-o-m; it is 4 points up, y-o-y.

In trade, the assessment of current economic situation in October increased, compared to September. According to respondents, in October, the finished goods stocks did not change. Expectations of the economic situation development for the period of the next three months are higher than in September, for next six months they are almost the same. In October, the confidence in trade increased after September drop by 4.7 points, m-o-m, and it is 5.7 points up y-o-y.

In selected services, according to respondents, the assessment of current economic situation increased compared to September. The assessment of demand as well as its expectations for the next three months increased too. For next three months, expectations of total economic situation development are higher than in September, for next six months they hardly changed. Most important barrier of production still is insufficient demand (it was stated by 30.6% of respondents). Confidence in selected services after September drop increased by 4 points, m-o-m, to be 1.3 point up y-o-y.

Consumer confidence indicator increased by 2.7 points compared to September and it is 7.3 points down compared to October 2010. The survey taken among consumers in October indicates that consumers are for the next twelve months slightly less afraid of a decrease in the overall economic situation as well as of their own financial standing. The share of respondents expecting rises in unemployment decreased a bit in October. Percentage of respondents planning to save money increased slightly. Respondents are still afraid of rises in prices.

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Note
Responsible manager: Juraj Lojka, director
Contact person: Marie Hörmannová, tel. +420274052049, 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: 18 October 2011
Related publication: 1201-10 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
Next News Release: 24 November 2011
Not edited for language

Note: Long term average is usually calculated over the period from 1990, if harmonised data are available (for the Czech Republic, it is an average since 1993).

Published: 24.10.2011
The data are valid as of the release date of the publication.