Expectations improved significantly

In June the seasonally adjusted Business Confidence Index of GKI remained essentially unchanged, but the expectations of consumers improved significantly and reached highs that haven’t been seen for two years.

 According to the survey of GKI Economic
Research Co. supported by the European Union in the business sphere,
the expectations of the industrial sector and services–that were
quite optimistic before–deteriorated slightly, whereas those of
construction and trade that were rather pessimistic have improved.
The latter refers to the slow recovery of certain segments of
domestic demand. The assessment of the perspectives of the Hungarian
economy improved in all sectors, among consumers in particular, but
generally it still remains unfavorable. Intentions of raising prices
were stronger in construction, trade and services but they weakened
in industry. Inflationary expectations of consumers were a lot more
moderate.
In June the deterioration of the industrial confidence
index was due to the worsening of the assessment of the stock of
orders. Within this segment, opinions on export orders stagnated. The
evaluation of production remained unchanged compared to May, but
expectations concerning the next three months became gloomier.
Compared to February, there was a big decrease in inventories
produced by the companies themselves. Evaluation of stocks and
employment plans improved.
Survey results on construction
indicate an improvement in production. This tendency has been present
for months now, although at a low level, compared to a low base and
with fluctuation. The evaluation of the stock of orders and
production improved a bit in June, just like employment expectations.

The confidence index of trade went up continuously during the
first six months of 2008, except for the fall recorded in April, but
it is still under the value recorded a year ago. The projection of
sales improved somewhat, expectations on future orders got better
significantly but those on the average level of inventories
deteriorated.
The confidence index of services has fluctuated for
two years without a pronounced trend, in June it decreased slightly.
The evaluation of the expected state of business and the future
turnover deteriorated somewhat, whereas expectations on employment
turned much gloomier. .
Following stagnation in the first two
months of 2008 and the decline of March and April, GKI’s consumer
confidence index reached its lowest level ever seen in its 13-year
history, then after the increase recorded in May and mainly in June
it reached a level not seen in two years. Besides the opinion on the
perspectives of the Hungarian economy household expectations
concerning their own financial position improved most sharply in
June, and expectations on unemployment became more favorable as well.