GKI’s Economic Sentiment Index Down in April

According to the empirical survey conducted by GKI Economic Research Co. with EU support, both businesses and households reported a somewhat less positive outlook in April than in March. Thus, GKI’s economic sentiment index decreased by 2 points, which is slightly smaller than the improvement in March (which was 3 points). The employment intentions of companies did not change significantly, while their price increase plans strengthened slightly. The predictability of the business environment improved substantially compared to the previous month.

The GKI economic sentiment index, a composite indicator of business and household sentiment, corrected negatively in April, falling 2 points after a 3-point rise in March. The GKI business confidence index also fell by 2 points. In April, only business services showed a positive change (up by 2 points), while trade remained unchanged and expectations worsened slightly in industry and construction (down by 4 and 2 points, respectively). In industry, the assessment of total order books and the outlook for production over the next three months also became more pessimistic. At the same time, it is positive that the level of stocks of own production decreased substantially. In construction, the assessment of order books deteriorated markedly, but employment expectations improved slightly. In trade, while satisfaction with the previous three months’ business performance increased, the assessment of expected orders in the next three months became less favourable, with the view on the level of inventories remaining broadly unchanged. In services, the perception of business in the previous three months improved significantly, turnover expectations for the next three months were little changed, and employment plans reflected greater optimism than before.

Businesses’ propensity to hire did not change significantly in April, and the proportion of those planning to expand and reduce their workforce was roughly the same. Optimists were only the majority among service companies. Overall price increase plans in the business sector rose slightly in April, especially in trade and construction. Predictability of the business environment improved markedly, with this indicator reaching an eight-month high.

The GKI consumer confidence index rose moderately in March, after a significant swing in January and February, and then fell within the statistical margin of error in April. Households saw their own financial outlook, and also Hungary’s economic situation as deteriorating for the next 12 months compared to March. At the same time, the financial situation over the past 12 months was seen as slightly improving, and the perception of own money to spend on high-value consumer goods also improved. Inflationary expectations of households rose slightly, and the fear of unemployment also became somewhat stronger than in March.