The GKI business climate index reached a four-month high in August

According to a survey conducted by GKI Economic Research Co. – with the support of the EU – in August both consumers and the business sector expressed more optimistic expectations than in July. The summary indicator of expectations, the GKI business cycle index, rose by over 2 points. Companies’ willingness to hire strengthened significantly. The combined expectation regarding the future development of sales prices remained unchanged compared to the previous month. The business environment also became slightly more predictable.

The GKI business confidence index – after a 2-point decline in July – rose by 2 points in August compared to the previous survey, thus returning to its June level. Positive news came from all four sectors, with sectoral confidence indices increasing to varying degrees compared to July. The construction industry remains the least, while business services remain the most optimistic sector.

The employment indicator, which reflects companies’ overall expectations regarding staffing, had been steadily declining for more than a year. This unfavorable trend broke in August, with companies’ overall outlook showing somewhat greater optimism than in July. Over the next three months, 7% of companies plan to increase staff, while 12% expect to reduce it. The most optimistic sectors are industry and services.

The predictability of the business environment also improved slightly, reaching a five-month high. Industrial companies continue to suffer most from the lack of predictability, while business service providers the least.

In July, the long-standing decline of the price indicator came to a halt. In August, there was no significant change in this respect. Over the next three months, 17% of companies plan to raise prices, while 7% are preparing for price reductions. For consumers, it is good news that price increase intentions in retail fell to a fifteen-month low.

The value of the GKI consumer confidence index in August was more than 2 points higher than in July. This brought the indicator to a four-month high. All components of the index showed improvement. Households assessed their financial situation over the past 12 months as noticeably better, and their financial outlook for the next 12 months as slightly improving. They also expected the country’s economic situation over the next 12 months to be more favorable than in July. The assessment of available funds for major consumer durables also improved. Inflation expectations among households rose slightly, while fears of unemployment declined compared to the seventh month of the year.