Economic sentiment index reaches new heights in July


According to economic research company GKI, business expectations are more optimistic than ever, with consumer expectations slipping slightly, although still high.

According to GKI economic sentiment index for July, Industrial and construction confidence within the business sphere grew to historic heights, with the service confidence index also performing well. However, commercial confidence declined slightly. In industry, the assessment of production and orders (especially exports) improved both for the last and coming periods. The survey found that inventories were considered somewhat higher than in June. 

In construction, there appears to be a difference between the prospects of civil engineering and structural engineering companies, with the sentiment among the former worsening but improving among the latter. The assessment of production, while still optimistic, declined in the preceding three months. The average length of production period filled with valid orders stood at a record 7.8 months in July. 

Following the increase in June, the commercial confidence index fell slightly, remaining within the narrow region it has occupied in the past four-and-a-half years. The assessment of sales positions and level of stocks showed no change, with that of orders slightly worsening. 

The services confidence index continued its growing trend from June, although is has still not returned to its peak of three months earlier. The assessment of sales outlook and the state of business improved both for the previous quarter and the next. Average capacity utilization stood very high, at more than 90% (86% in industry). Intentions to employ grew in all sectors except services, with the fear of unemployment still low, albeit higher than in June. 

The largest obstacle to production growth is seen as being the labor shortage, with the lack of skilled labor seen as a limiting factor by half of respondents. The perspectives of the Hungarian economy deteriorated in all sectors (and also among consumers) in the past two months. That deterioration continued in July, with the exception of industry. In contrast to June, the intention to lift prices grew in industry and services, while becoming lower in construction. Despite the inflationary expenses falling among consumers, the share of companies planning price rises continued to grow. 

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