The GKI economic sentiment index dropped to a 30-month low as both the business and consumer sentiment indices dropped in July, GKI Gazdaságkutató Zrt. said on Monday. Business confidence has been decreasing since January and is currently at early 2017 levels.
In July, the consumer confidence index decreased roughly as much as it rose in June. Households saw their financial situation, their savings capabilities and the possibility of purchasing high-value durables as worse than a month earlier. The consumer index has been lower in recent months, but it's still visibly lower than around the elections in spring 2018. Nevertheless, Hungary's economy remains characterised by optimism overall, the survey, which is supported by the European Union, found.
The economic sentiment index dropped to 0.6 points in July from 2.4 a month earlier. Business confidence decreased from 5.7 to 4.3 while consumer confidence fell from -7 points to -10.1.
Expectations in all business sectors except construction deteriorated as the business index dropped to its March 2017 level in July, continuing this year's falling trend. Production volume, the assessment of stocks and incoming orders (except exports) all decreased, while production outlook remained unchanged.
The construction index was unchanged in July. Structural engineering companies regained some of their recently lost optimism, while civil engineering firms became more pessimistic in July. The assessment of production in the preceding three months dropped slightly while that of orders plummeted.
The trade confidence index also decreased in July after holding level in June, remaining in the central zone of the relatively narrow band in which it had fluctuated for the past five years. The assessment of sales positions improved slightly, expectations concerning new orders fell considerably, and respondents assessed the size of stocks as the same as in June.
The services confidence index continued to decrease in July as the assessment of business climate, turnover and sales prospects all fell.
The employment intentions of all sectors rose in July to some degree, with construction companies leading the way. The fear of unemployment of households rose slightly after the July decrease. Intentions to raise prices were somewhat lower in all sectors, while the inflationary expectations of consumers continued to decrease slightly.
The assessment of the situation of the Hungarian economy remained unchanged overall. It improved considerably in industry after a major drop in June but fell perceptibly in trade and services as well as among households,
