In April business environment in industry and retail trade is positive, in construction and services sector still negative
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that in April 2021 business confidence indicators have risen above zero in retail trade and manufacturing, as well as have improved in services sector and construction.
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 half a year environment in retail trade is positive again
According to seasonally adjusted data, in April confidence indicator in retail trade comprised 1.4. Last time positive value (2.2) was registered in October 2020. As compared to March, this indicator has grown by 14.2 percentage points. It was affected by a much more positive forecasts of enterprise managers regarding activity of their enterprise in the next three months. Confidence indicator has grown in both food and non-food retail trade, as well as in retail trade of fuel. Business environment has also improved in sale of motor vehicles, sale of motor vehicle parts and accessories, maintenance and repair of motor vehicles. After a break of several months, confidence of the majority of sectors mentioned has reached positive values, the most optimistic are fuel retailers (21.6). Negative confidence indicators still remain in retail trade of non-food products (-6.9) and sale of motor vehicles (-10.2).
In March 52 % of retail sale enterprises indicated that their economic activity is significantly restricted by impact of COVID-19. Compared to March, this indicator has reduced by two percentage points. Also competition in trade sector (36 %) and insufficient demand (24 %) restricts successful activity of retail trade enterprises. In April, compared to March, share of enterprises in retail trade feeling no factors restricting economic activity has slightly increased. Their share comprised 14 %.
Environment of the most pessimistic services sectors so far has improved significantly
In services sector in April 2021, according to seasonally adjusted data, confidence comprised -3.8. As compared to March, this indicator has grown by 14.9 percentage points. Business environment has improved in almost all services sectors, even though it is still negative in the largest part. Significant improvement was also registered in several services sectors, where, under the impact of COVID-19, it was especially low for a long time: in travel agency and tour operator sector (of 50.5 percentage points), accommodation (34.8 percentage points), but in catering and transport by air (26.4 and 27.8 percentage points, respectively).
In April, 29 % of respondents of services sector have not felt any factor restricting economic activity, but 32 % of respondents indicated that consequences from COVID-19 is a significant factor restricting successful economic activity. Also insufficient demand and financial difficulties was significant restrictive factor in services sector, which was indicated by 29 % and 15 % of entrepreneurs surveyed, respectively.
Confidence indicator in construction sector still is the lowest among all areas
In April this year confidence indicator in construction, according to seasonally adjusted data, was -13.7, which, compared to the previous month, has risen by 7.4 percentage points. It was affected by a more optimistic forecasts of company managers regarding the expected development of employment in the next three months and more positive assessment regarding level of construction orders. Confidence indicator increased in all construction sectors – construction of buildings, civil engineering and specialized construction activities.
In April construction sector was mostly affected by bad insufficient demand – it was mentioned as a factor restricting economic activity of enterprises by 37 %. The second significant factor was bad weather conditions, which was indicated by 33 % of respondents. 13 % of enterprises indicated negative impact of COVID-19. In April the number of enterprises having indicated lack of labour force and financial difficulties as a restrictive factor (both factors were indicated by 11 % of construction enterprises) has slightly increased. In April 15 % of respondents felt no factors restricting their economic activity.
Confidence indicator in manufacturing has reached positive value since the beginning of pandemic
In April confidence indicator in manufacturing has reached 3.0 (increase of 8.6 percentage points, compared to March), and it is positive for the first time since February 2020. It was affected by a more positive assessment of entrepreneurs of the current level of orders and significantly more optimistic forecasts of enterprise managers regarding activity of their enterprise in the next three months (the expected growth in production activity and economic activity). The largest increase of confidence indicator, as compared to the previous month, was in such manufacturing sectors as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of rubber and plastic products, manufacture of electrical equipment, manufacture of chemicals and chemical products, manufacture of food products, manufacture of wearing apparel and manufacture of non-metallic mineral products. In turn, there was a drop in manufacture of wood and of products of wood and cork, manufacture of textiles and manufacture of machinery and equipment n.e.c. As compared to the previous months, business environment has improved significantly regarding expected sale price of goods and development of employment in the following three months.
As compared to April 2020, assessment of entrepreneurs regarding the expected volume of export orders for the next three months (of which, assessment of export orders has increased significantly to member states both of the European Union (EU) and the Commonwealth of Independent States (CIS)) has grown by 37.7 percentage points (reaching 6.9 percentage points). Also competitiveness assessment of manufacturing during the last three months has improved both in domestic and external markets (in domestic market and external market in the EU countries, reaching positive values) and total volume of orders of enterprises during the last three months.
Compared to March this year, drop was observed in the number of enterprises indicating insufficient demand (32 % of respondents), but increase was observed in the share of entrepreneurs having indicated lack of labour force and lack of materials or equipment (19 % and 17 %, respectively). In April 16 % of respondents indicated impact of COVID-19. Share of manufacturing enterprises surveyed economic activity of which was not affected by any restrictive factor was at the level of the previous month (26 % of respondents). Compared to April of the previous year, the share of enterprises indicating insufficient demand has reduced by 8 %, but the number of respondents indicating lack of labour force and lack of materials or equipment has increased significantly (rise of 2 and 2.4 times).
In April 2021 economic sentiment indicator comprised 101.73, which is 11 points more than in March. 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.