Business confidence indicators in October 2020, compared to September, have slightly decreased in industry, construction and services, but in retail trade the indicator has remained at the level of September, according to the data of business surveys conducted by the Central Statistical Bureau (CSB).
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Business confidence indicators describe the general situation in the sector and are obtained by conducting business surveys in the industrial, construction, retail and service sectors. If the indicator is above zero, there is a positive business environment, if below zero – a negative mood of entrepreneurs.
In retail, the assessment of entrepreneurs remains positive for the third month in a row
According to seasonally adjusted data, the retail confidence indicator was 2.2 in October, which is exactly the same as in September (1.8 in August). In the food retail trade, as the economic situation continues to improve, confidence indicators are positive and even slightly higher than in October last year. The mood of entrepreneurs in the retail trade of non-food products has also been positive in October, although slightly lower than in the corresponding period of the previous year. Confidence in the sale of motor vehicles, motorcycles, parts and accessories, as well as in the repair of motor vehicles and retail sale of fuels is negative and their values are lower than in October last year.
According to the CSB data, in October, the main factor limiting economic activity in retail trade, as in the period before the Covid-19 outbreak at the beginning of the year, is still competition in its trade sector, which was noted by 43% of respondents. This is followed by insufficient demand (25%) and the impact of Covid-19 on business in the retail sector (24%). The importance of this factor has continued to decline. It is more than twice lower than in April, when it reached a maximum of 54%, and 3 percentage points lower than in July. In October, 28% of retailers did not experience any factors limiting economic activity.
In the services sector, the confidence indicator falls by 3.6 percentage points
In the services sector 2020. In October 2006, according to seasonally adjusted data, the confidence was -11.7. Compared to September, this indicator has decreased by 3.6 percentage points. In several service sectors, confidence indicators have significantly decreased compared to September, for example, in the catering sector the indicator has decreased by 24.3 percentage points, reaching a negative value of -20.0.
Compared to September, a significant decrease was also observed in the insurance sector, as well as in renting and operating leasing (in both sectors by 14.5 percentage points). However, confidence levels in travel agencies and tour operators, as well as in air transport services, remain particularly low. In contrast, in computer programming as well as in postal and courier services, business sentiment is positive and continues to improve.
40% of respondents in the services sector did not experience any factors limiting economic activity in October, which is the highest level since January this year, but 33% of respondents still indicated that the consequences of Covid-19 are a significant limiting factor for their successful economic activity. The value of this indicator is almost the same as in July. 29% of respondents in the service sector have indicated that their economic activity is significantly limited by insufficient demand. Only 5% of respondents cite labor shortages, which have significantly lost their relevance since April, as a limiting factor.
In construction, the confidence indicator falls by 3.4 percentage points
The confidence indicator in construction in October this year decreased by 3.4 percentage points compared to the previous month, falling to -21.4, which was affected by an even greater decline in the assessment of the level of construction orders and entrepreneurs’ negative assessment of expected employment in the next three months. The confidence indicator decreased in all construction sectors – building construction, civil engineering and specialized construction.
The CSB reports that in October the number of respondents who indicated insufficient demand (35% of surveyed construction enterprises) as well as the impact of weather conditions (11% of surveyed enterprises) from all factors limiting the economic activity of construction enterprises increased slightly, and the number of respondents increased by 4 percentage points. indicating the effect of Covid-19 (10% of respondents). On the other hand, the number of companies that noted labor shortages (12% of surveyed construction companies) and financial difficulties (14% of respondents) as a limiting factor has slightly decreased.
More than a year ago, construction companies experienced insufficient demand and financial difficulties (by 7 and 2 percentage points respectively), but less by the effects of weather conditions (by 6 percentage points) and labor shortages (by 10 percentage points). 33% of the surveyed construction companies’ economic activity in October was not affected by any restrictive factors.
The manufacturing confidence indicator falls by 2.5 percentage points
In manufacturing, the confidence indicator was -5.7 in October (2.5 percentage points lower than in September), which was influenced by an even more negative assessment of business leaders about the current level of orders and forecasts of their company’s activity in the next three months (expected decline in production activity, total decline in the valuation of economic activity).
The largest month-on-month decline in the confidence indicator was in manufacturing industries such as basic pharmaceuticals and pharmaceuticals, textiles, printing and reproduction of recorded media, manufacture of wood and of products of wood and cork, and machinery and equipment nec. Compared to September, the sentiment of entrepreneurs regarding the expected sales prices of goods and the development of employment in the coming months has also deteriorated.
Compared to October 2019, the assessment of entrepreneurs for the expected volume of export orders in the next three months has decreased by 3 percentage points (including the assessment of export orders to both European Union (EU) and Commonwealth of Independent States (CIS) member states). The assessment of the competitiveness of the manufacturing industry in the external market has also decreased in the last three months. In turn, the volume of companies’ total orders has increased in the last three months.
Compared to October last year, the number of companies that indicated a lack of materials and equipment in the company out of all factors influencing production in the company has slightly increased (9%), but the impact of Covid-19 has been indicated by 12% of respondents. On the other hand, the number of companies that marked the lack of labor as a limiting factor of production decreased by 13 percentage points (to 11%), and the number of respondents who indicated insufficient demand decreased slightly (35% of respondents). The economic activity of 37% of surveyed industrial enterprises in October was not affected by any restrictive factors.
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