Improving Expectations in May

In May the seasonally adjusted Economic Sentiment Index of GKI-that have been published since 1996-increased explicitly from the lows of April that have never been seen before.

 The survey of GKI Economic Research Co.  supported by the European Union indicates that the
expectations of each industry and those of consumers turned for
better in May compared to April. After the fall recorded in April,
particularly the assessment of the perspectives of the Hungarian
economy increased spectacularly in the business sector, indicating
that one of the major causes of pessimism in April was the break-up
of the coalition government.
In May, the business confidence
index rose slightly above the level of March. In industry,
expectations concerning production and stock of orders improved in
May compared to April. Although the assessment concerning the
production of the former period deteriorated slightly, the impact of
favorable changes proved to be stronger. Expectations on export
orders stagnated, intentions concerning employment worsened. At the
same time intentions of raising prices as well their scope moderated.

Survey results on construction indicated a further deterioration
in the assessment of the perspectives of production, whereas the
evaluation of the stock of orders and future employment increased
somewhat. Intentions to raise prices among survey respondents were
more moderate in May than in April.
The confidence index of trade
went up continuously in the first quarter of 2008, then after the
fall recorded in April set to increase again in May. The projection
of sales, future orders and the average level of inventories improved
compared to the previous month. Nevertheless, the expected rate of
general price rise for the next three months mounted after the
significant decrease in April.
In services the evaluation of the
general state of business and the willingness of employment improved
pronouncedly, but the assessment of future turnover became slightly
more pessimistic.
Following stagnation in the first two months of
2008, GKI’s consumer confidence index declined significantly in May
to its lowest level ever of its 13-year history partly dragged by the
fall registered in March and April. In May the index moved upwards
and reached the level of March.
Household expectations concerning
their own financial position, their short-time savings capabilities
and unemployment improved. Consumers were more pessimistic about the
rate of price rises.