GKI Analysis: The GKI business climate index remained unchanged in June, but companies’ inflation expectations decreased further

The GKI business confidence index – after a more than 2-point decrease in May – rose by one point in June compared to the previous survey, returning its value to the level of three months earlier. This month, industrial expectations improved significantly, and the sector’s confidence index rose by three points compared to the previous survey. The trade index did not change, the construction index fell by 3 points, and the service sector index fell by almost 2 points. These shifts did not change the overall picture, with construction remaining the least optimistic and business services the most optimistic sector.

The employment indicator, which indicates the aggregated staffing expectations of enterprises, remained essentially unchanged in June compared to the previous month. A significant negative change occurred only in the construction industry, not in the other sectors. In the next three months, 8% of enterprises are preparing to expand their workforce, while 12% would reduce it. A month ago, these two ratios were 9% and 12%.

The assessment of the predictability of the business environment did not change significantly in June either, with the worst assessment still coming from the construction industry.

June is the sixth consecutive month in which the price indicator, i.e. the indicator that summarizes the business sector’s pricing plans into a single number, decreased compared to the previous month. As a result, this indicator fell to an eight-month low. Price increase intentions decreased in all sectors except trade. In the next three months, 17% of companies want to raise prices, while 8% are preparing to reduce prices. A month ago, these two ratios were 20% and 8%.

In June, the population’s outlook deteriorated somewhat compared to May. The GKI consumer confidence index fell by two points and fell to its lowest level in 19 months. The population assessed its financial situation for the past 12 months as slightly deteriorating, but its financial outlook for the next 12 months as slightly improving compared to the previous month. In addition, they believe the country’s economic situation will deteriorate in the next year, and their assessment of their own money that can be spent on high-value consumer goods has not changed. The population’s inflation expectations increased slightly, and the outlook for the expected development of the number of unemployed people deteriorated noticeably.