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

GKI's economic sentiment index adjusted for seasonal effects 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, both business and consumer expectations improved.

In the business sphere, expectations became more upbeat mostly in sectors with a focus on the domestic market that are traditionally more pessimistic than the average (such as construction, trade and services), whereas those of industry basically stagnated.

In industry, the value of the confidence index decreased within the margin of error but stayed on the positive territory-even if only with a minimal extent. Stocks of own production were considered higher but the assessment of past production improved and that of stock of orders stagnated (among this that of exports increased). In construction the confidence index has been fluctuating within the margin of error between June and September but it increased notably in October. The assessment of production in the past three months improved significantly, that of the stock of orders stagnated. In trade, the confidence index increased markedly in October after its drop in September and thus stepped out from the negative range. Particularly the assessment of sales positions improved but expectations on orders also turned significantly better. Nevertheless, stocks were considered higher than before. In services, the confidence index increased significantly in October and thus got back to the level of this summer. Turnover expectations improved for both the past and the next three months.

In industry, intentions to increase prices flattened but its scope widened, whereas in trade both of them got stronger. In construction the gap in the ratio of the companies planning price reductions and that anticipating price increases narrowed, but those expecting decreasing prices were still in majority. In services firms expected higher selling prices. Consumers' inflationary expectations decreased. Intentions to employ dropped in industry but they increased in the other three sectors. Fear from unemployment declined significantly among citizens. The assessment of the prospects of the Hungarian economy improved among households and in all sectors, too. It increased the most in construction but it still remained the most pessimistic sector.

GKI's confidence index of consumers had increased continuously after its low in April 2009 and jumped to its high in June 2010. It had been stagnating with some fluctuations between July and September and in October it reached its highest value since four and a half years. The assessment of consumers' own financial position improved significantly and the prospects of their saving capacity for the next 12 months also got better slightly. Households were still a lot more positive in the assessment of the future than the past, and this gap got even larger in October.