Retailer are pessimistic, the service sector is no lower

After the bottom recorded during October and November the value of GKI’s economic sentiment index adjusted for seasonal effects dropped again in December.

 According to the survey conducted by
GKI Economic Research Co. (www.gki.hu) with the support of the
European Union, business and consumer expectations decreased, though
the size of this fall was less than before.
Concerning business
expectations, the deterioration of the confidence indices of industry
and service slowed down notably, that of trade decelerated somewhat
as well, whereas the confidence index of construction increased
slightly compared to November. In industry, the evaluation of past
and future production and stock of orders-that of exports in
particular-deteriorated, but the assessment of stock of own
production improved. Intentions to raise prices remained unchanged,
employment expectations deteriorated further.
In construction
expectations of firms concerning production deteriorated, the
assessment of orders stagnated and the intentions to increase
employment improved slightly in December. Expectations concerning the
increase of production prices were somewhat higher than before but
those expecting a price reduction were still in a majority.
In
trade expectations concerning stocks was not increasing any more, but
opinions concerning stock of orders and sales positions dropped
significantly. Expectations concerning price rising remained low and
unchanged.
In the service sector the assessment of the state of
the business compared to November did not deteriorate further,
whereas the opinion on future sales and short-term intentions to
employ dropped notably.
The prospects of the Hungarian economy
deteriorated in industry, trade and services, but stagnated in
construction. Only a few percent of the respondents expect an
improvement in the economy during the next few months. According to
the survey, the main effect of the global crisis is the decreasing
demand, to which companies react mostly with cost cutting. Three
quarters of the respondents from industry expect a decrease in their
business possibilities and only 2 percent thought that the crisis
will bring new possibilities for them. These latter companies are
mainly from the mechanic industry, the plastic products industry and
the clothing industry. There were intentions to decrease employment
in the manufacture of vehicles and machinery and the wood industry.
The postponement of investments was expected in the pharmaceutical,
the chemical and the wood industry. Companies from communications,
engineering, milk industry and non-electric machinery would react to
the crisis with innovation. A change of profile was most expected in
non-electric machinery, the manufacture of plastic products industry
and metal processing. In construction and trade every second
respondent expected a decrease in demand and many of them anticipated
more expensive credits and decreasing credit sources. In construction
many respondents projected an increase in the stock of receivables,
too.
In 2008 GKI’s consumer confidence index indicated a slow
increase from the very low value of May until September. Then it came
to a dramatic fall in October and the decrease continued during the
last two months of the year. The assessment of future unemployment
deteriorated the most, whereas expectations of households concerning
their financial position were less worse, those concerning short-term
savings capacities remained unchanged compared to November.
Inflationary expectations, too, stagnated in December. The
expectations of households over their own financial position and
plans concerning the purchase of high value durable increased
slightly though they expected a drop in the latter over a one-year
term.