Economic Sentiment Index Hardly Changed in December

According to the empirical survey conducted by GKI Economic Research Co. with the support of the EU, the outlook for the business sector deteriorated further in December, but consumers became slightly more optimistic.

GKI’s business climate index has been falling in small steps but essentially flat in the second half of this year, slipping to an 18-month low in December. Firms’ employment plans were little changed from November, but the predictability of the business environment deteriorated markedly. Firms’ plans for price increases increased markedly, and households’ inflation expectations rose slightly compared with the previous month.

GKI business confidence index fell by one point in December compared to November. This was enough to push this indicator to a 39-month low. The industrial confidence index fell by two points compared to the previous survey, while the indices for construction, retail traders and business services were within the statistical margin of error. Again, retail trade is the least optimistic sector and business services the most optimistic.

The overall propensity to hire of businesses was not significantly changed compared to November – employment intentions strengthened in industry and services, while weakening in construction and trade. The perception of the predictability of the business environment deteriorated sharply in December after November, bringing this indicator to a 24-month low.

The aggregate price increase plans of the business sector rose markedly compared to the previous month, bringing this indicator to a two-year high. The change in one month was relatively mild in the retail sector, while price increase plans for industrial and construction producers and service providers jumped sharply. In December, after three months of decline, the GKI consumer confidence index finally rose by two points compared to the previous month. The perception of the financial situation in the past 12 months and the outlook for the next 12 months also improved compared to November. In addition, expectations for the country’s economic situation over the next year have also improved. However, there was a slight deterioration in the assessment of own money to be spent on high value consumer goods. The inflation expectation of the population continued to rise slightly, while the unemployment expectation remained unchanged.