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GKI: economic sentiment at historic peak

Logistics

According to an empirical survey conducted by economic research institute GKI, business expectations have never been more favorable than now, while consumer expectations have only been more favorable once before, during the 100-day action program of the  government of Péter Medgyessy in 2002.

Economic research institute GKIʼs combined gauge of consumer and business confidence rose to 7.9 points in December, from 5.0 points in the previous month.

The standalone business confidence index rose to a historic record of 13.4 points, up from 11.7 points as expectations improved in all sectors apart from the service sector.

According to a summary of the analysis published by GKI, in the business sphere the industrial and construction confidence indices also reached a historic peak in December, while only once has the commercial confidence index been slightly more favorable than now. Expectations of service companies deteriorated somewhat compared to November, though from a historical peak at that time.

In December, the industrial confidence index surpassed its peak in September. The assessment of production in the preceding period, the stock of orders (excluding exports) and production expectations all became more favorable.

Optimism is soaring in construction, as the industry’s confidence index has reached new peaks month after month, jumping even higher in December. Compared to November, expectations of companies in structural and civil engineering also became more favorable, while assessment of production in the preceding quarter and that of orders increased considerably in December.

The trade confidence index reached the top of a relatively narrow band in which it has fluctuated for almost four years, reaching its highest point since January 2014. The assessment of sales positions and the level of stocks improved, whereas that of orders worsened slightly.

The confidence index of services dropped slightly in December compared to the previous month. The assessment of the state of business and the sales outlook declined.

Intentions to employ and to increase prices went up in all sectors. The fear of unemployment of households eased further.

Nearly half of companies in construction and 40% of those in trade planned to raise prices, whereas the inflationary expectations of consumers eased. The assessment of the perspectives of the Hungarian economy was more optimistic in construction and especially in trade than in November, whereas it deteriorated in industry and services.

Following a slight decrease in November, GKI’s  standalone consumer confidence index rose exceptionally sharply in December, from -14.2 to -7.7 points. Both the assessment of households’ own financial position and their savings capacity turned better for the next 12 months than in November. At the same time, fear of unemployment has never been lower, according to the GKI survey.

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

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