MNB Business Climate Index Still in Negative Range

The Business Climate Index of the National Bank of Hungary (MNB) improved to minus 5 points in December from minus 7 points in November, but remained in the negative range indicating a negative business climate, the central bank has said on its website .

Contributing to the rise in the index was a reduction in negative perceptions of the current situation (from minus 14 to minus 11 points in November) and a slight increase in the index of expectations for the future (from zero to 1 point).

The report showed that firms' perceptions of their current earnings are positive, but expectations for the future remain pessimistic.

Average capacity utilization rose by 1 percentage point to 92% of a year earlier, while revenue levels fell by a similar amount to 103% of a year earlier.

The investment plans index remains positive, but the index fell from 24 points in the previous month to 18 points in the final month of the year.

The sub-index for staffing plans rose to 2 points from minus 3 points in November, returning to positive territory since September, they said.

Medium and large companies, as well as those in industry and construction, continued to place more positively, with most reporting an improvement in business sentiment.

However, there were contrasting trends among micro firms and respondents in services and trade, the report said.

MNB has been conducting monthly business sentiment surveys – usually involving between 1,000 and 2,000 firms – since December 2020. These are said to provide more detailed and direct feedback on the situation and outlook of economic agents than aggregate statistics.

The MNB's Business Climate Index is calculated by taking into account both the current situation and the perception of expectations, which provides a single indicator of the business climate in Hungary. The scale ranges from minus 100 to plus 100 points, with positive values indicating an improvement and negative values a deterioration.