GKI Economic Sentiment Index Slightly Up

According to a survey conducted by GKI Economic Research Co. with the support of the EU, the GKI economic sentiment index edged upwards in April. Both consumer and business outlooks in Hungary showed a slight improvement compared to March. While firms’ employment intentions remained unchanged from the previous survey, the aggregate expectation regarding future sales prices decreased significantly. Concurrently, the perceived predictability of the business environment deteriorated.

Business outlook reached its low in January of this year, followed by a modest positive shift. The GKI business confidence index rose by one point in April compared to March, a change within the statistical margin of error. The industrial sector showed signs of recovery, with its confidence index increasing by nearly 3 points month-on-month. In contrast, the equivalent indicator for the service sector declined by 2 points. Confidence indices for the trade and construction sectors remained virtually stagnant on the monthly basis. The construction industry continues to be the least optimistic sector, while business services remain the most upbeat.

The employment indicator, reflecting companies’ staffing expectations for the coming period, remained stable in April compared to the previous month. No significant changes were observed across the surveyed sectors. Over the next three months, 9% of companies plan to increase their workforce, while 11% anticipate reductions. The assessment of the predictability of the business environment saw a noticeable decline in April, returning this indicator to its level at the end of last year.

The price indicator, which consolidates the business sector’s pricing plans into a single figure, decreased substantially for the fourth consecutive month compared to the previous survey, reaching a six-month low. Price increase intentions declined across all four sectors, with a particularly sharp drop in the trade sector. In the next three months, 26% of companies intend to raise prices, while 8% are planning price reductions.

The GKI consumer confidence index reached its lowest point in November 2024, and since then, household sentiment has improved somewhat. In April, this indicator was 1.5 points higher than in March. Households’ assessment of their financial situation over the past 12 months improved significantly, while their financial outlook for the next 12 months saw a slight improvement. Expectations regarding the country’s economic situation over the next 12 months also improved compared to the previous month. Furthermore, the perception of households’ ability to spend on high-value consumer durables also became more positive. Consumers’ inflation expectations decreased, and the outlook regarding the expected number of unemployed also became more favorable compared to the previous survey.