Hungary economic sentiment index leaps to two-year high

According to the empirical survey conducted by Hungarian think tank GKI with the support of the European Union, business confidence was last as high as in May one year ago and consumers have not been this confident about what lies ahead for more than two years. The business confidence index rose to -10.5 points in May from -15.6 points in April and the consumer confidence index went up to -34.4 from -38.9 pts. The GKI-Erste economic sentiment index improved to -16.7 points from -21.7.

Except for service companies expectations improved significantly in every sector within the business sphere. After a fall in April the industrial confidence index recovered to its February level and the confidence indices in construction and trade have not been this high for more than two years and for over a year, respectively.

In the industry, the evaluation of prospects concerning production and orders improved, but that of export orders did not change. In construction, the positive shift in sentiment accelerated in May. The assessment of the production of the preceding three-month period and that of orders greatly improved compared to April.

In trade the assessment of sales positions and expected orders has turned more favourable, but the respondents evaluated the level of stocks as slightly rising. The services confidence index decreased moderately in May on the back of a worsened outlook on sales. The assessment of the general state of business and sales in the preceding period, however, improved.

After plummeting in April, intentions to employ showed a spectacular improvement. The ratio of those planning layoffs dropped especially therefore their ratio is now behind, albeit only marginally, of those that plan staff expansions. There was a major change in construction, as well, but those planning layoffs are still in majority. Intentions to employ at trade and service companies, however, diminished. The fear from unemployment of households decreased somewhat.

In May, the majority projected price reductions not only in the construction sector but also in the industry and services sectors. Plans to raise prices have become more subdued in trade too and consumers’ inflation expectations palpably moderated. The assessment of the outlook on the Hungarian economy improved greatly in all sectors and among households too, but the majority still believe deterioration is on the way.

Apart from a dip in April the rise in the consumer confidence index has been almost unfazed since the autumn of 2012. Households assessed their future financial situation (for the next 12 months) better. They also considered their possibilities of purchasing high-value consumer durables and accumulating savings better than in April.

• Tags:
• erste,
• gki,
• economy,
• sentiment,
• confidence