GKI’s business sentiment index hits bottom

Firms have not been downbeat ton such an extent since three years, consumers since thirteen years.

 In April the seasonally adjusted
Economic Sentiment Index of GKI that have been published since 1996
declined to lows never seen before. The survey of GKI Economic
Research Co. –supported by the European Union–indicates
that the expectations of each branch and those of consumers were
worse in April than in March. Although the deterioration that took
place is April is not spectacular, The breakdown of the coalition
government must have played a part in this pessimism. An argument for
this is that the assessment of the perspectives of the Hungarian
economy deteriorated significantly both in the business sector and
among consumers.
In the business sphere, the weakening of the
European business cycle made industry more pessimistic. In the other
branches that have stronger ties to domestic demand, the downbeat
mood have gained again that had appeared to fade away in the past few
months.
Following an improvement having been registered in
February, the confidence index of industry deteriorated again in
April 2008, and reached the level of last January. Although the
assessment of production related to the past three months improved in
April compared to March, the evaluation of the future perspectives
worsened slightly. Nevertheless, the assessment of the stock of
orders became somewhat more positive, but expectations on export
orders weakened. Inventories increased, but intentions concerning the
increase of employment improved as well.
Survey results on
construction indicated a deterioration in the assessment of the
perspectives of production and the stock of orders in April compared
to the previous month. The evaluation of future employment, too,
weakened somewhat. Therefore, following a modest increase in the past
few months, the confidence index of construction went back
significantly in April.
The situation was similar in trade, since
following an increase February and March, the confidence index
dropped to the level of January 2008 in April. The projection of
sales and the expectations on future orders worsened strongly, but
the projection of the average level of inventories improved slightly.

The confidence index of services, too, decreased in April.
The evaluation of the general state of business and of future
turnover became more pessimistic, and expectations on employment
deteriorated compared to the previous month.
The extent of
planned price rises grew somewhat in industry, but the number of
those intending to raise prices fell. Inflationary expectations
remained unchanged in construction and they declined in services.
According to respondents in trade, the average rate of price
increases anticipated for the next three months was down to a low
level not seen for one and a half year. The rate of inflation
expected by consumers was up slightly in April compared to March.

The assessment of consumers of their financial state, short-time
savings capabilities and expected unemployment improved in April
compared to the previous month.