Consumer confidence hits rock bottom

The GKI-Wallis index, a composite of consumer and business confidence indices excluding seasonal effects, fell 2.3 points to minus 16.8 in July as consumer confidence plunged nearly 5 points during the same period, economic research firm GKI said on Monday. Consumer confidence has fallen dramatically since the general elections in April in reaction to the austerity measures outlined by the government two months ago. The index fell by 19 points in June and by another 5 points in July to stand at minus 48 points, a record low since mid-1996, the GKI said. Three of the four components of the index worsened, particularly household expectations of their own outlook for the next 12 months. Expectations for higher unemployment for the next year has also risen. Fears over an upward pressure on inflation heightened but expectations as regards the ability slightly improved. The business confidence index took less of the brunt with a fall of only 1.4 points to minus 5.8 points. The outlook for trade businesses deteriorated slightly but respondents in manufacturing and construction industry were more optimistic. Overall business expectations worsened again in July, just as in June, with the index at minus 5.8 points, down 1.4 points. The GKI last measured a similar figure in March. Expectations in commerce, which is sensitive to changes in domestic demand, worsened, while expectations in the industrial sector, where the outlook has been more or less unchanged since March, improved slightly thanks to a fall in stocks. However, the outlook for production and stock of orders deteriorated. Employment expectations were unchanged. More companies said they planned to raise prices. All businesses reported a deteriorating outlook for Hungary's economy. (Econews, Vg 2, Nv 5)