Economy 18 December 2023, 8:44am

Hungarians' confidence in the economy on the rise

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In December, household expectations improved significantly and the outlook for the business sector improved slightly compared to November, pushing the Economic Research Institute's (GKI) business sentiment index to a nine-month high. Firms' employment intentions improved only within the margin of error, while their price increase plans improved markedly compared to the previous month.

The GKI business confidence index rose by 1 point in December, within the margin of error, after a 3-point rise in November. In the first month of winter, the outlook for trade and construction improved significantly, the industry improved slightly, while the business services sector outlook was virtually unchanged from November.

In industry, the outlook for total order books has improved, with inventories of own production falling, but the production outlook for the next 3 months has deteriorated monthly.
In the construction sector, the assessment of order books improved significantly and employment expectations improved slightly.
In the distributive trades, the level of inventories fell only slightly, but satisfaction with the previous 3 months' business and the outlook for orders in the next 3 months improved markedly.
In the services sector, business sentiment in the previous three months was positive, but turnover and employment expectations for the next three months deteriorated somewhat compared with November.

The GKI Consumer Confidence Index rose markedly in December, after November's uncertainty, reaching a 20-month high. Compared to the previous month, the public rated their own financial situation over the past 12 months as improving, while their financial outlook for the next 12 months was little changed. The perception of personal money to spend on high value consumer goods has become more positive than it was in November.

Businesses' propensity to hire in December improved within the margin of error compared with the previous month, with those planning to increase their workforce slightly outnumbering those planning to lay off. Optimists are in the majority in industry and business services, while in trade and construction the two proportions are broadly equal. The public's fear of unemployment is unchanged from last autumn.

Aggregate price plans in the business sector rose markedly in the final month of the year, while consumers' inflation expectations eased compared to November. Businesses and the general public have similar views on the outlook for the Hungarian economy, with both groups much less pessimistic about the near future than in November.

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