GKI's economic sentiment index reached its four-and-a-half-year high in October

GKI's economic sentiment index adjusted for seasonal effects continued to increase in November. The nearly continuous rise started one and a half years ago and the index has not been as high as now since four and a half years. According to the survey conducted by GKI Economic Research Co. (www.gki.hu) with the support of the European Union, business expectations improved whereas those of consumers stagnated.

In the business sphere, expectations became more upbeat in all sectors except for services. In industry, expectations on production were considered significantly better by the companies. The assessment of the production in the past three months deteriorated slightly but that of stock of orders improved, although among this that of exports dropped slightly. Intentions to invest got somewhat stronger concerning the next year. In construction the assessment of production in the past three months deteriorated, whereas expectations turned better on the whole. The stock of orders was considered better by the respondents. In trade, the confidence index continued to increase-although only modestly-in November after its sharp increase in October. The assessment of sales positions deteriorated, expectations on orders turned better and the average level of stocks were considered smaller than before. In services, the confidence index remained unchanged in November compared with the previous month and thus stagnated at the level of this summer. The assessment of the state of business deteriorated slightly compared with October, but turnover expectations improved for both the past and the next three months.

Intentions to increase prices and to employ additional work force were rather different according to individual sectors. In industry and trade, intentions to raise prices flattened both by its scope and extent. In construction those expecting decreasing prices were still in majority. In services more firms expected higher selling prices than lower ones. Consumers' inflationary expectations strengthened. Intentions to employ dropped in industry and services but they went up in construction and trade. Fear from unemployment declined among citizens, too. The assessment of the prospects of the Hungarian economy improved in all sectors except for construction where it dropped notably. In this regard construction remained the most pessimistic sector. Consumers also considered the overall state of the Hungarian economy worse.

In November, GKI's confidence index of consumers stayed at its highest value since four and a half years (it decreased within the margin of error). The assessment of consumers' own financial position concerning the future deteriorated somewhat compared with October. The prospects of their saving capacity for the next 12 months turned better slightly and their opinion on buying high value goods in the future (mainly in the distant future) also improved.