Expectations hit historical bottom again

After the historical bottom recorded in October the value of GKI’s economic sentiment index adjusted for seasonal effects fell further in November.

 According to the survey conducted by
GKI Economic Research Co. (www.gki.hu) with the support of the
European Union, in industry the evaluation of production and
particularly the opinion on the future period deteriorated further.
There is dissatisfaction concerning the stock of orders in general
and that of exports in particular. Unemployment expectations, too,
became more downbeat. The stock of own production decreased. The
assessment of business plans indicates that investment expenditures
will decrease even in nominal terms next year.

In
construction, trade and services the confidence index slowly
improved–in comparison to a very pessimistic basis–in the first
nine months of the year. This trend changed in autumn. In
construction expectations of firms concerning production, the
assessment of orders and especially the intentions of employment hit
their historical bottom. In November the confidence index in trade
decreased to a level that has not been seen for years. Expectations
relating to orders deteriorated significantly, opinions on sales
positions dropped, but notably less, whereas the assessment of stocks
deteriorated slightly. In October the deterioration of the confidence
index in the service sector was followed by a sharp fall in November
and thus it reached its historical bottom. The assessment of future
sales and the state of the business dropped significantly, whereas
short-term expectations relating to the intentions of increasing
employment deteriorated less than those concerning sales.
Intentions
to raise prices remained unchanged in industry, they decreased in
trade and fell notably in construction. In the latter sector now
those willing to reduce prices form a significant majority.
Consumers’ inflationary expectations that had been improving since
spring and had moved notably upwards in October, resumed to improve
in November.
The prospects of the Hungarian economy have never
been considered worst by any sectors during the history of the
surveys. Nevertheless, the opinion of consumers deteriorated only
slightly in November compared to the previous month.
In 2008
GKI’s consumer confidence index remained unchanged in the first two
months, then it decreased during the following three months, then
from May to September it increased slowly. It produced a dramatic
fall in October and it decreased a bit further in November reaching
its lowest value this year. Households’ expectations over their
financial position and their short-term savings capacities changed
only slightly. People became markedly more pessimistic over
unemployment.