The value of GKI’s economic sentiment index has been falling

According to the survey conducted by GKI Economic Research Co. with the support of the European Union, business expectations deteriorated even more sharply in February than in January, whereas the deterioration of consumer expectations slowed down.

 In industry, the drop of
the confidence index came to a halt in February. However, it seems
too early to report a bounce back since the evaluation of past and
future production and stock of orders–including export
orders–deteriorated, only the assessment of stocks of own
production improved slightly. Intentions of raising employment
deteriorated further. In construction the confidence index fell
notably in February, assessment of production and orders as well as
intentions to increase employment deteriorated. In trade the
confidence index improved slightly in January after the fall that has
prevailed since mid-2008 but this did not continue in February and
the index dropped back to the level of last December. Expectations
concerning sales positions and stocks of orders expected for the near
future decreased significantly whereas the assessment of stocks
improved slightly. In February, the confidence index of the service
sector continued to drop in line with the downward trend that has
prevailed since last September. Opinions on sales for the next three
months deteriorated most but the assessment of the state of the
business for the past period also fell. Intentions concerning
employment decreased slightly as well.

In both industry and
construction the number of firms expecting price reductions increased
and were in majority. In trade expectations concerning price rises
during the next three months were still modest. The prospects of the
Hungarian economy deteriorated in all spheres of the economy. In
households, too, there were no respondents expecting improvement.

GKI’s consumer confidence index has been falling since
October 2008 but its decline was the smallest in February during this
period. Expectations of households concerning their financial
position and short-term savings capacities and their assessment of
future unemployment were slightly worse. Fear from price rising
became stronger among consumers although businesses expect price
reductions. Present plans concerning the purchase of high value
durables stagnated and one-year term plans deteriorated slightly.