In October business environment of entrepreneurs positive only in manufacturing
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that in October 2021 business confidence indicators continued to worsen in retail trade and services sector, but in construction and industry business confidence indicators have not changed significantly.
Business confidence indicators characterize general situation in the sector and they are acquired by carrying out business surveys in industry, construction, retail trade and services sector. If the indicator is above zero, business environment is positive, if it is below zero – business environment is negative.
After a break of half a year business environment of entrepreneurs in retail trade is negative again
According to seasonally adjusted data in October confidence indicator in retail trade comprised -2.0 and it is getting worse already for the third consequent month. As compared to September, this indicator has dropped by 5.7 percentage points. In October environment indicators of food products and fuel were below zero (-6.6 and -11.1, respectively). In retail sale of non-food products environment indicators still is positive (1.3), however, compared to September, it has experienced a significant drop (of 16.4 percentage points). Business environment is negative also in trade of motor vehicles (-12.0), but business environment of sale of motor vehicle parts and accessories, maintenance and repair of motor vehicles, even though compared to September has worsened, is still positive (3.5). It must be taken into account that with the arrival of autumn reduction of seasonal character is typical to confidence indicators in retail trade.
In October 44 % of retail sellers have indicated that their economic activity was significantly restricted by the impact of Covid-19; compared to September, this indicator has grown by 16 percentage points and is close to value of May this year. Importance of lack of labour force as a restrictive factor has reduced slightly – it was indicated by 19 % of respondents. Insufficient demand and competition in trade sector as a factor restricting their economic activity was mentioned by 17 % and 38 % retail sellers, respectively, and, compared to September, these indicators have also dropped. The share of retail sale enterprises feeling no factors restricting their economic activity has dropped significantly in October. If in September their share comprised 22 %, in October this share was only 16 %.
Environment in services sector is worsening and drops below zero
Also in services sector business environment of entrepreneurs continued to worsen, and in October 2021, according to seasonally adjusted data, confidence comprised -1.2. As compared to September, this indicator has dropped by 1.8 percentage points. Last time environment in services sector in general was negative in April this year. Indicators of environment differ significantly in various services sectors, and also trend of their changes differ depending on the specificities of the sector, seasonal impact and to what extent Covid-19 pandemic affects the sector. Compared to September, significant drop in confidence was in accommodation and catering sectors (of 26 percentage points in each). Indicators of business environment of entrepreneur, which in summer months and in September was positive in these sectors, now have dropped below zero. However, the most pessimistic in October were providers of building maintenance and landscape architectural services sectors (-27.7) as well as providers of security services (-19.9). However, the most optimistic were entrepreneurs in computer programming (19.2) and insurance (18.1) sectors. In general environment in October was positive in 13 out of 30 services sectors surveyed.
In October, 27 % of respondents of services sector have not felt any factors restricting economic activity. However, the share of respondents indicating that consequences caused by Covid-19 is a significant factor restricting successful economic activity, has increased to 28 %, which is 5 percentage points more than in September. Also importance of financial difficulties as a restrictive factor has risen slightly (15 %). Significance of other factors potentially restricting business has not changed over the last month: insufficient demand (28 %) and lack of labour force (16 %).
In construction confidence indicator remains stable and negative
In October this year, according to seasonally adjusted data, confidence indicator in construction comprised -10.3 (compared to the previous month, reduction of 0.1 percentage point), and it was affected by a more pessimistic forecast of entrepreneurs on the development of employment in the following three months. Confidence indicator reduced in construction of buildings and civil engineering, but rose in specialized construction activities.
In October construction sector was affected the most by lack of labour force (indicated by 29 % of respondents). Compared to the previous month, the share of entrepreneurs having indicated this factor, has increased by four percentage points. The second most often factor restricting activity of entrepreneurs indicated was insufficient demand (indicated by 27 % of entrepreneurs surveyed). 9 % of enterprises indicated negative impact of Covid-19. Financial difficulties was indicated by 16 % of respondents, but lack of materials or equipment and impact of weather conditions was indicated by 12 % and 11 % of enterprises, respectively. Compared to October last year, the number of enterprises having indicated lack of materials or equipment and lack of labour force has increased significantly (rise of 3.9 and 2.4 times, respectively), but the share of enterprises having indicated insufficient demand has dropped by eight percentage points. In October this year 24 % of construction enterprises surveyed felt no factor restricting their economic activity.
Confidence indicator in manufacturing remains positive
In October confidence indicator in manufacturing was 0.3 (compared to September, has not changed). The largest increase of confidence indicator, as compared to the previous month, was in such manufacturing sectors as manufacture of rubber and plastic products, manufacture of metal products, manufacture of machinery and equipment n.e.c. and manufacture of electrical equipment. In turn a drop was observed in manufacture of paper and paper products, manufacture of beverages, manufacture of motor vehicles, trailers and semi-trailers, repair and installation of machinery and equipment, as well as manufacture of wood and of products of wood and cork. As compared to the previous month, forecast of entrepreneurs on the expected development of employment have become negative, but expected sale prices of goods in the following three months – more optimistic.
As compared to October 2020, negative assessment of entrepreneurs regarding the expected volume of export orders for the next three months (of which, assessment of export orders has improved slightly to member states both of the European Union and the Commonwealth of Independent States) has improved by 2 percentage points. Also competitiveness assessment of manufacturing during the last three months has improved (both in domestic market and external market, reaching positive values) and total volume of orders of enterprises during the last three months.
Compared to September this year, share of enterprises having indicated lack of labour force and insufficient demand (30 % and 28 % of enterprises surveyed, respectively) has increased, but the number of enterprises having indicated lack of materials or equipment out of all factors restricting production has slightly decreased (indicated by 18 % of respondents). In October 10 % of enterprises surveyed indicated impact of Covid-19. Share of manufacturing enterprises, whose production in October was affected by financial difficulties, was at the level of the previous month (8 % of respondents). Compared to October last year, the number of respondents having indicated lack of labour force and lack of materials or equipment has increased significantly (rise of 2.6 and 1.9 times, respectively), but the share of enterprises having indicated insufficient demand has dropped by six percentage points. In October this year, economic activity of 26 % of manufacturing enterprises surveyed was not affected by any restrictive factor (drop of five percentage points, as compared to the previous month).
In September 2021 economic sentiment indicator comprised 100.73, (99.8 – in the previous month). Economic sentiment indicator characterizes general socio-economic situation in the country during a certain period of time (month), and it is calculated by the European Commission, Directorate-General for Economic and Financial Affairs for all EU countries according to a common methodology, taking 15 various seasonally adjusted components included in industry, construction, retail trade and services sector, as well as in consumer confidence indicator, as a basis.
1Business surveys in industry, construction, retail trade and services sector are carried out by the CSB monthly, accordingly methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys co-financed by the European Commission.
2Net (balance) is calculated as difference between positive and negative answers of entrepreneurs surveyed, which are expressed in per cent.
3Value of the indicator exceeding 100 means that numeric characteristic of the economic situation exceeds long-term average value (2000–2020). While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.