Economy 22 May 2025, 8:40am

Consumer and business confidence both on the decline in Hungary

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According to a survey conducted by GKI Economic Research Institute with the support of the EU, both consumers and companies were slightly more pessimistic in May compared to April. The business sector's propensity to hire deteriorated somewhat compared to the previous survey, while aggregate expectations for the expected development of sales prices fell to a seven-month low. The assessment of the predictability of the business environment remained unchanged.

The business outlook reached its lowest point in January this year, after which there was some positive movement until April. This positive trend came to a halt in May, with the GKI business confidence index falling by a good 2 points compared to the previous survey, returning to the level of the beginning of the year.

The confidence indices of all four sectors surveyed fell by 2-3 points compared to April. Construction remains the least optimistic sector and business services the most optimistic.

The employment indicator, which shows businesses' aggregate expectations for their workforce management, fell slightly in May compared with a month earlier. There were no significant changes in industry and trade, but slightly less favourable signals than before were received from construction and business services. In the next three months, 9% of businesses are planning to expand their workforce, while 12% are planning to reduce it. Perceptions of the predictability of the business environment were little changed in May, with the worst assessment coming from construction.

May is the fifth consecutive month in which the price indicator, an indicator that condenses business price plans into a single figure, has fallen from the previous month, to a seven-month low. All four sectors saw a decline in price increase intentions, particularly among business services. In the next three months, 20% of firms intend to raise prices, while 8% are planning to cut prices. A month ago, the two ratios were 26 and 8% respectively.

The GKI Consumer Confidence Index started the year at a fairly low level, before rising slightly in April. In May, this indicator turned negative and essentially fell back to the January-March level. Respondents assessed their financial situation over the past 12 months as slightly improving, but their financial outlook for the next 12 months as moderately deteriorating.

The country's economic outlook for the next 12 months was slightly better in May than it was a month earlier. However, the perception of own money to spend on high value consumer goods deteriorated slightly. The public's expectations of inflation have fallen and fears of unemployment have eased somewhat.

Cover photo (for illustration purposes only): Getty Images