In August business environment improved in services sector, but worsened in industry, retail trade and construction
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that business confidence indicators in August 2021 have gone down in retail trade, construction and industry, however, in services sector business environment is slightly improving each month.
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 three-months rise business environment has worsened in retail trade
According to seasonally adjusted data, in August confidence indicator in retail trade comprised 6.2. As compared to July, this indicator has dropped by 3.2 percentage points. Already for the fourth consequent month confidence indicator is positive both in food and non-food retail trade, as well as in retail trade of fuel. Business environment is positive also in sale of motor vehicles. As the autumn is approaching, confidence indicators in retail trade are experiencing reduction of seasonal character, therefore, seasonally unadjusted indicators in August, as compared to July, have gone down: in retail trade of food products by 5.3 percentage points, of non-food products – by 6.4 percentage points. A rapid fall of 17.4 percentage points, as compared to July, was experienced in business environment in retail trade of fuel.
The share of retail sale enterprises feeling no factors restricting their economic activity is continuing to increase with every month. Their share in August comprised 24 %. Insufficient demand was indicated as a restrictive factor by 19 % of retail sellers and, compared to July, this indicator has risen. In turn, significance of lack of labour force as a restrictive factor has slightly fallen – it was indicated by 14 % of respondents. In August 29 % of retail sale enterprises surveyed indicated that their economic activity is significantly affected by Covid-19 impact, in January their share comprised 55 %, but a month ago – 33 %.
In services sector business environment is becoming slightly more optimistic each month
In services sector confidence in August 2021, according to seasonally adjusted data, was 6.9. As compared to July, this indicator has grown by 0.9 percentage points, but the value is positive already since May. In general business environment in services sector is stable, as it is improving each month. Significant rise in confidence, as compared to July, was in advertising and market research (of 15.8), motion picture, video and television programme production, sound recording and music publishing activities (of 10.5) and warehousing and support activities for transportation (of 9.2 percentage points). In August business environment was negative in 8 out of 30 services sectors surveyed, however, in part of them, for example, land and water transport it is assessed as normal, seasonally low indicator. The most pessimistic environment in August, the same as a moth ago, was in building maintenance and landscape architectural services sector (-10.4).
In August, 30 % of respondents of services sector have not felt any factor restricting economic activity, but 25 % 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 28 % and 13 % of entrepreneurs surveyed, respectively. Since March importance of lack of labour force as a restrictive factor is increasing each month. In August it was marked by 15 % of entrepreneurs surveyed. In general, as compared to July, data acquired on factors restricting economic activity in services sector have not changed significantly in August.
In construction confidence indicator is reducing again
In August this year, according to seasonally adjusted data, confidence indicator in construction comprised -9.9 (compared to the previous month, reduction of 1.6 percentage points), and it was affected by a less optimistic assessment of entrepreneurs on the development of employment in the following three months. Confidence indicator reduced in construction of buildings and civil engineering, in turn it rose slightly in specialized construction activities.
In August, the same as in July, construction sector was affected the most by insufficient demand and lack of labour force (indicated by 28 % and 27 % of entrepreneurs surveyed, respectively). 6 % of enterprises indicated negative impact of Covid-19. Lack of materials or equipment were indicated by 14 % of construction enterprises, while financial difficulties and impact of weather conditions – by 12 % and 7 % of respondents, respectively. Compared to August last year, the number of respondents having indicated lack of materials or equipment and lack of labour force has risen significantly (3.9 and 1.8 times, respectively). In August this year 28 % of construction enterprises surveyed felt no factors restricting their economic activity.
Confidence indicator in manufacturing is reducing, but remains positive
In August confidence indicator in manufacturing comprised 0.1 (2.4 percentage points less than in July), and it was affected by a more negative assessment of entrepreneurs regarding level of current orders. The largest drop in confidence indicator, compared to the previous month, was in such manufacturing sectors as manufacture of beverages, manufacture of other transport equipment, manufacture of rubber and plastic products, manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of fabricated metal products, manufacture of chemicals and chemical products and repair and installation of machinery and equipment. In turn, there was an increase in manufacture of paper and paper products, manufacture of motor vehicles, trailers and semi-trailers, manufacture of electrical equipment and printing and reproduction of recorded media. As compared to the previous month, business environment of entrepreneurs on the development of employment and expected sale prices of goods in the following months is less optimistic.
Compared to July this year, share of enterprises having indicated lack of labour force and financial difficulties (25 % and 11 % of enterprises surveyed, respectively) has increased slightly, but the number of enterprises having indicated lack of materials or equipment out of all factors restricting production has decreased (indicated by 15 % of respondents). In August 8 % of enterprises surveyed indicated impact of Covid-19. Share of manufacturing enterprises, whose production in August was affected by insufficient demand, was at the level of the previous month (indicated by 27 % of respondents). In August this year, economic activity of 35 % of manufacturing enterprises surveyed was not affected by any restrictive factor (increase of 4 percentage points, as compared to the previous month).
In August 2021 economic sentiment indicator comprised 101.93, (102.9 – 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.