Economic sentiment reaches new peak in June


The Economic Sentiment Index measured by research institute GKI continues to be high. Business expectations in June were close to their peak reached in February, while consumer confidence remained only a little below its peak as well.

GKIʼs combined gauge of consumer and business confidence rose to 9.8 points in June, up from 8.3 points in the previous month. The standalone business confidence index rose from 13.8 points to 15.3 points.

Expectations became more upbeat in June in the business sphere, except for in industry, whereas the construction confidence index rose to a new historical peak, the latest GKI report says.

The industrial confidence index declined somewhat compared to its peak in May. This was partly due to the deteriorating assessment of both production and the stock of orders (including exports) of the preceding and the next period, according to GKI. Only the assessment of inventories became somewhat better, it added.

The construction confidence index rose only marginally in June, but nevertheless reached a new high again. Expectations of civil engineering companies improved, while those of structural engineering firms deteriorated slightly. Although the assessment of production in the preceding three-month period improved somewhat, that of orders deteriorated slightly.

Following its peak in February, the trade confidence index has deteriorated for three months; however, it almost reached its February level in June. The assessment of sales positions and the stock of orders improved considerably, while that of inventories became worse.

Following its drop in May, the services confidence index increased in June; however, it did not reach its historic April high. The evaluation of the general business climate improved, and sales expectations also improved.

Intentions regarding employment weakened in industry, whereas they strengthened in trade, services, and especially in construction. The fear of unemployment among households has never been so low, noted GKI.

Intentions to raise prices became somewhat more moderate in industry and services, whereas they were more marked in construction and especially in trade. Inflationary expectations of consumers continued to strengthen somewhat.

The assessment of the perspectives of the Hungarian economy deteriorated spectacularly in almost all sectors. However, there was some improvement in trade and among consumers.

GKIʼs standalone consumer confidence index improved in June, and was not far from its peak in April or 16 years ago, rising to -5.7 points in June from -7.5 points in May. Households assessed their financial situation and savings capacity for the future slightly better than a month ago. Households were also more optimistic over their chances of purchasing high-value durables.

GKI compiles the index with the support of European Union funding.

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