In May business environment is positive only in retail trade for the third consequent month
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that in May 2022 business confidence indicators were negative in construction, manufacturing and services sector. Only business environment in retail trade still remains positive.
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.
Business environment positive in all sub-sectors of retail trade
In May 2022 confidence indicator in retail trade, according to seasonally adjusted data, comprised 1.4. As compared to April, this indicator has dropped by 0.6 percentage points. Business environment was positive in all sub-sectors of retail trade. According to seasonally non-adjusted data, the most optimistic in May were motor vehicle (13.7) and fuel retailers (13.2). As compared to the previous month, confidence indicators have risen also in retail sale of food and non-food products, reaching 7.5 and 11.4. Only in sale, maintenance and repair of motor vehicle parts business environment has worsened. Even though confidence indicator in this sector is positive (3.5), however, compared to April, it has reduced by 2.4 percentage points.
The share of retail sale enterprises feeling no factors restricting their economic activity comprised 25 % in May. The share of enterprises having mentioned insufficient demand as a restrictive factor has become stable (24 %). However, retail sellers feel lack of labour force more than in April – it was mentioned by 20 %. As usual, especially restrictive factor in retail trade is competition in their trade sector (34 %). 12 % of respondents mentioned that their activity is directly or indirectly negatively affected by war in Ukraine and related sanctions. 5 % of respondents mentioned price rise as a restrictive factor, which is also partially related to the war.
The most optimistic entrepreneurs are in accommodation, the most pessimistic – in telecommunication
In the services sector, the seasonally adjusted confidence indicator in May 2022 was negative (- 2.4) and business environment of entrepreneurs has improved by 0.5 percentage points, compared to April. As usual, indicators of environment differ significantly in various services sectors, and also trend of their changes differ depending on the specificities of the sector and seasonal impact. According to seasonally non-adjusted data, the most optimistic in May were enterprises in accommodation sector (38.9), where confidence indicator has reached its highest value since June 2019. They were followed by enterprises in catering (14.3) and providers of information services (10.7). In turn, the most pessimistic business environment was registered in water (- 27.8) and air transport (- 22.9), as well as postal and courier activities (- 20.3). In May environment in general was positive in 19, but negative – in 11 services sub-sectors.
In May, 36 % of respondents of services sector have not felt any factor restricting economic activity. Their share, compared to April, has not changed. Activity of 26 % of entrepreneurs of services sector is significantly restricted by insufficient demand, but of 18 % – by lack of labour force. The share of respondents indicating that consequences caused by COVID-19 still is a factor restricting their successful economic activity, has dropped to 3 %. In turn, 12 % of respondents mentioned that their activity is directly or indirectly negatively restricted by war in Ukraine and related sanctions. 4 % of respondents indicate price rise, which increases costs of enterprises.
Business environment in construction increasingly more negative
In May confidence indicator in construction, according to seasonally adjusted data, is -15.2 which, compared to the previous month, has worsened by 1.1 percentage point. In May, compared to April, assessment of enterprises regarding the expected development of employment in the next three months was less optimistic. Confidence indicator is negative in construction of buildings and civil engineering, positive – in specialized construction activities.
In May construction sector was mostly affected by lack of materials or equipment (indicated by 33 % of respondents). Lack of labour force and insufficient demand each was indicated by 26 % of enterprises, but financial difficulties and impact of weather conditions were mentioned by 21 % and 10 % of respondents, respectively. As compared to May last year, the share of enterprises, whose economic activity is restricted by financial difficulties, has risen 1.8 times, but impact of weather conditions – reduced 2 times. Rise in prices of building materials, fuel and energy resources (14 % of respondents), as well as war in Ukraine and geopolitical situation in the world (4 % of entrepreneurs surveyed) were mentioned as other factors restricting construction in May. Only some enterprises indicated negative impact of COVID-19. In May, economic activity of 16 % of construction enterprises surveyed was not affected by any restrictive factor (drop of 7 percentage points, as compared to May last year).
Environment in manufacturing is improving
In May, compared to April, confidence indicator in manufacturing has grown by 0.6 percentage points and comprises -2.7. It was affected by a slightly more positive assessment of enterprise managers regarding level of current orders, as well as larger decrease in stocks of finished products. The largest increase of confidence indicator, as compared to the previous month, was in such manufacturing sectors as manufacture of electrical equipment, manufacture of paper and paper products, manufacture of other transport equipment, manufacture of textiles, manufacture of furniture. In turn, there was a drop in manufacture of rubber and plastic products, manufacture of machinery and equipment n.e.c., manufacture of other non-metallic mineral products, printing and reproduction of recorded media and manufacture of beverages.
Compared to April, the number of respondents having indicated lack of materials or equipment as a factor restricting production has slightly increased (mentioned by 27 % of respondents). Compared to May last year, impact of this factor has risen by 7 percentage points. In turn, impact of insufficient demand and lack of labour force has remained at the level of the previous year (indicated by 25 % and 21 % of enterprises surveyed). As other factors restricting production in May war in Ukraine, political situation in the world and impact of sanctions (8 % of respondents), as well as rise in production costs – prices of raw materials and resources – (5 % of enterprises) were mentioned. Impact of COVID-19 was mentioned only by 1 % of enterprises surveyed (indicating morbidity and sequelae from COVID-19). In May, economic activity of 28 % of manufacturing enterprises surveyed was not affected by any restrictive factor.
In May 2022 economic sentiment indicator comprised 94.43, (95.0 – 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.
1 Business 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.
2 Net (balance) is calculated as difference between positive and negative answers of entrepreneurs surveyed, which are expressed in per cent.
3 Value of the indicator exceeding 100 means that numeric characteristic of the economic situation exceeds long-term average value (2000–2021). While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.