Business cycle survey - July 2011

Confidence in economy decreased a bit

Overall confidence in domestic economy decreased slightly m-o-m in July. The composite confidence indicator (economic sentiment indicator) decreased by 0.5 point. Confidence of entrepreneurs decreased by 1 point m-o-m; confidence of consumers increased by 1.5 points, m-o-m. Compared to July 2010, the composite confidence indicator is 2.8 point down; if compared to its values during recession (in second half of 2008 and in 2009), it is significantly higher.

Business confidence indicator decreased by 1 point in July. Confidence decreased in industry, in selected services, and in trade; in construction it increased. Compared to July 2010, the confidence of entrepreneurs is 0.3 points down. With exception of construction, all surveyed branches have however already overcome confidence decrease during recession.

In industry, the assessment of current overall economic situation increased. The assessment of current total demand increased slightly, positive assessment of foreign demand decreased a bit. According to respondents, stocks decreased slightly. Production capacity utilization in manufacturing industry increased in July and reached 84.5%; respondents estimate they have work secured by contracts for 7.4 months, which is also slightly more than in the previous quarter. Most important barrier of production still is insufficient demand, it was stated by 40% of respondents. For next three months, respondents are cautious according to the development of production activity and demand, and expect improvement of employment. Expectations of general economic situation development for the next three as well as six months are higher than in June. All in all the confidence in industry decreased by 0.7 point; compared to July 2010 it is 1.7 points down. If compared to its values during recession, confidence in industry is on significantly higher levels and it is also higher than its long-term average.

In construction, the assessment of current economic situation decreased markedly m-o-m in July. Still low assessment of total demand decreased further. For the period of the next three months respondents expect a rise in construction activity by better employment. Respondents estimate that they have work secured by contracts for 8.3 months ahead. Expectations of the economic situation development for the next three as well as six months are more cautious than in June. Overall, confidence in construction increased by 1 point m-o-m in July and it is 6 points down, y-o-y.

In trade, the assessment of current economic situation in July decreased, compared to June. According to respondents, in July, the finished goods stocks did not change. Expectations of the economic situation development for the period of the next three months are slightly better than in June, for next six months they are lower. The confidence in trade decreased by 1 point, m-o-m, after previous rise; it is 8 points up y-o-y.

In selected services, according to respondents, the assessment of current economic situation decreased compared to June. The assessment of demand did not change compared to June, its expectations for the next three months decreased. For next three as well as six months, expectations of total economic situation development are slightly lower than in June. Most important barrier of production still is insufficient demand (it was stated by 32.1% of respondents). Overall, the confidence in selected services decreased by 1.7 points, m-o-m, to be 1.3 points up y-o-y.

Consumer confidence indicator increased by 1.5 points compared to June, but it is 13 points down compared to July 2010. The survey taken among consumers in July indicates that consumers are for the next twelve months still afraid of a decrease in the overall economic situation as well as of their own financial standing, even though the fears are lesser than in previous month. The share of respondents expecting rises in unemployment decreased slightly in July. Percentage of respondents planning to save money decreased a bit too. Respondents again consider present times not convenient for saving and expect rise in prices in next twelve months.

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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: 19 July 2011
Related publication: 1201-10 Business Cycle Survey in Enterprises of Industry, Construction, Trade and Selected Services
Next News Release: 24 August 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: 25.07.2011
The data are valid as of the release date of the publication.