Business cycle survey - April 2011

Confidence in economy decreased further

Overall confidence in domestic economy decreased again m-o-m in April. The composite confidence indicator (economic sentiment indicator) decreased slightly for the fourth time in a row after two-year almost continual growth, namely by 1.2 point. Its decrease was caused by a slight decrease in entrepreneurs’ confidence and a low level of confidence of consumers. Confidence of entrepreneurs decreased by 1.7 point m-o-m; confidence of consumers increased slightly (by 1 point) after previous marked drop. Compared to April 2010, the composite confidence indicator is 1.3 point up.

Business confidence indicator decreased by 1.7 point in April. Among entrepreneurs, confidence decreased the most in selected services; confidence in industry for the second time in a row. In construction and in trade confidence increased slightly. Compared to April 2010, the confidence of entrepreneurs is 4.6 points up. After gradual growth during the whole 2010, business confidence has been decreasing this year, namely due to more cautious expectations.

In industry, the assessment of current overall economic situation hardly changed. Positive assessment was caused namely by the rise in foreign demand; assessment of total demand decreased. According to respondents, stocks decreased. Production capacity utilization in manufacturing industry increased in April and reached 84.3%; respondents estimate they have work secured by contracts for 7.3 months, which is slightly more than in the previous quarter. Most important barrier of production still is insufficient demand, even though compared to previous quarter it is stated by less respondents (35.7%). For next three months, respondents expect a slight decrease in production activity growth and a slight decrease in employment. Expectations of general economic situation development for the next three as well as six months are also lower than in March. All in all the confidence in industry decreased by 1.6 point; compared to April 2010 it is however 6.7 points up.

The survey on investment activity taken among industrial enterprises suggests that after previous stagnation the level of investment should increase in 2011; by 7%. 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 decreased m-o-m in April. Low assessment of total demand did not change. For the period of the next three months respondents expect an increase in construction activity and in employment, compared to March. Respondents estimate that they have work secured by contracts for 7.6 months ahead. Expectations of the economic situation development for the next three as well as six months are lower than in March. Overall, the confidence in construction increased by 2 points, but it is 5.5 points down, y-o-y.

In trade, the assessment of current economic situation in April hardly changed, compared to March. According to respondents, in April, the finished goods stocks increased. Expectations of the economic situation development for the period of the next three as well as six months are higher than in March. The confidence in trade increased by 2.6 points, m-o-m; it is 5.6 points up y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased slightly compared to March. The assessment of demand decreased; its expectations for the next three months are the same. For the period of the next three months expectations of total economic situation development are lower than in March, for next six months they are the same. Most important barrier of production still is insufficient demand (it was stated by 32.5% of respondents). Overall, the confidence in selected services decreased by 3.3 points, m-o-m, after previous rise and it is 3.4 points up y-o-y.

Consumer confidence indicator increased slightly (by 1 point) compared to March after a marked drop; it is 12.2 points down compared to April 2010. The survey taken among consumers in April indicates that consumers are for the next twelve months afraid of a decrease in the overall economic situation as well as in their own financial standing, even though less than in March. The share of respondents expecting rises in unemployment increased slightly in April. Percentage of respondents planning to save money decreased slightly. Also the expectations of rise in prices in next twelve months remained relatively high in April.

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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 April 2011
Related publication: 1201-10 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services
Next News Release: 24 May 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: 26.04.2011
The data are valid as of the release date of the publication.