German-Hungarian Chamber: Companies Not Very Optimistic

Businesses are not very optimistic about their prospects, which is also reflected in the fact that they are cutting back on their investment and employment plans, President of the German-Hungarian Chamber of Industry and Commerce (DUIHK), András Sávos, said on Wednesday at the presentation of the body's 2023 fall business survey.

In the DUIK's survey, 209 companies reported on their economic outlook, their own development, the risks affecting their companies, the labor market and investment.

Dirk Wölfer, Head of Communications at DUIHK and author of the study, highlighted that "according to the fall survey, one in two companies expects the general economic situation to deteriorate further, and only 12% of respondents expect an improvement in the next year.

According to the survey, 40% of companies consider their own business situation to be good, while one in ten companies reported a poor business situation.

Dirk Wölfer said that firms' own business expectations have weakened compared to the spring survey. 18% of respondents expect their business expectations to improve, 34% expect them to worsen.

The subdued business expectations are also reflected in investment and employment intentions, with 37% of respondents saying they would reduce investment spending and 25% saying they would increase it.

When asked about the impact of inflation on their business, three-quarters of respondents highlighted increasing wage pressures, with one in two companies citing a decrease in profitability. Inflation is also affecting investment plans, as high interest costs make financing more expensive and investment costs rise, leading one third of companies to postpone planned investments and one in five to abandon previously planned improvements," Dirk Wölfer said.

According to the DUIHK fall survey, employment plans are subdued, with the balance of positive and negative responses around zero for the first time since 2013, meaning that the number of companies planning to hire more staff is roughly the same as the number planning to cut staff.

As Dirk Wölfer pointed out, for the first time, companies were asked about the severity of skills shortages in specific areas. The responses showed that the shortage was most acute in production manual workers, but that more IT and R&D specialists were also needed.

The survey found that firms cited weakening demand, a shortage of skilled labor and rising labor costs as risks to their own businesses.