Business cycle survey - November 2010

Confidence of entrepreneurs and consumers increased

Overall confidence in domestic economy increased m-o-m in November. The composite confidence indicator (economic sentiment indicator) increased by 1.3 point, due to an increase in both entrepreneurs’ and consumers’ confidence. Confidence of entrepreneurs increased by 1.1 point m-o-m; confidence of consumers increased by 2.2 points. Compared to a low value in November 2009, the composite confidence indicator is 11.7 points up.

Business confidence indicator increased by 1.1 point in November compared to October. Among entrepreneurs, confidence increased in industry and in trade; it dropped in construction and in selected services. Compared to a low value in the last year, the confidence of entrepreneurs is 15.5 points up.

In industry, the assessment of current overall economic situation in November increased markedly compared to October. The assessment of total demand increased as well. According to respondents, stocks decreased. For next three months, respondents expect improvement of production activity as well as of employment. Expectations of general economic situation for the next three months are slightly higher than in October, for next six months they are lower. All in all the confidence in industry increased further (by 3 points in November); compared to low values in last year it is 23.7 points up.

The survey on investment activity taken among industrial enterprises suggests that the level of investment in 2010 should remain on the level of previous year and increase by some 7% in 2011, which however still does not balance the drop by a fifth suggested by a survey in 2009. Moreover, investments will from almost three thirds flow only to a renewal of production equipment; and lesser funds will be allocated to an extension of production capacities and purchase of new technologies.

In construction, the assessment of current economic situation increased slightly in November compared to October. Low assessment of total demand decreased further. For the period of the next three months respondents expect a slight improvement of construction activity by almost unchanged employment, compared to October. Respondents estimate that they have work secured by contracts for 8.2 months ahead. Expectations of the economic situation development for the next three months are higher than in October, for next six months they are almost the same. Overall, the confidence in construction decreased due to low demand by 2.5 points, m-o-m, to its lowest value since June 1999; it is also 6.5 points down, y-o-y.

In trade, the assessment of current economic situation in November decreased, compared to October. According to respondents, in November, the finished goods stocks increased. Expectations of the economic situation development for the period of the next three months are markedly higher than in October and they are higher for next six months too. In general, the confidence in trade increased by 1.3 points, m-o-m, and 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 October. The assessment of demand increased slightly; its expectations for the next three months decreased a bit. For the period of the next three months expectations of total economic situation are higher than in October, for next six month they are slightly lower. Overall, the confidence in selected services remains at relatively higher values from summer 2010; it decreased by 1 point, m-o-m and it is 10 points up y-o-y.

Consumer confidence indicator increased by 2.2 points compared to October, to be 3.8 points up, compared to November 2009. The survey taken among consumers in November indicates that consumers expect for the next twelve months a slight decrease in the overall economic situation, but they do not expect such a drop in their own financial standing yet. The share of respondents expecting rises in unemployment decreased m-o-m in November. Percentage of respondents planning to save money decreased as well.

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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: 18 November 2010
End of data processing: 22 November 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 (namely market and financial ones), 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: 24.11.2010
The data are valid as of the release date of the publication.