Ecostat big company confidence improves in October

The index rose 4 to 44 in October compared to September. In October 2005 the index measured 51. Ecostat noted that the index has remained in a narrow band for the past two years, following sentiment on global markets. Considering the trend, Ecostat said confidence among Hungary's biggest companies was likely to remain stable in the coming months. Ecostat said big company managers in Hungary are counting on strong export demand in the last months of 2006 and the beginning of 2007. If FDI in Hungary remains unchanged, the country's trade deficit could be financed without causing the gap to widen further by 2008. Although the government's austerity measures will hurt big businesses, stronger exports should offer some compensation, Ecostat said. About 65% of managers surveyed by Ecostat said their short-term outlooks for Hungary's economy had deteriorated. 35% said their outlook was unchanged.
Asked about the outlook for their own companies in the coming six months, more managers said they were optimistic than in September. Just one-third projected worsening conditions. Managers remained pessimistic about their production levels: just 39% said they planned to boost output, down from 44% in September and 50% in the summer. Three-quarters of managers expected their stock of orders to remain unchanged. The rest expected the stock to rise. Half of managers said domestic demand would remain unchanged in the coming six months. Only one-tenth said demand would rise. Asked about export demand, however, 44% of managers predicted growing demand, while 56% said demand would remain unchanged. About one-fifth of managers said they planned to make new hires in the coming period. 70% said they would keep staff numbers unchanged. About 36% of managers predicted their companies' financial positions would deteriorate in the next six months. Still, half said they would boost investments. More than three-fourths of managers said they would like to make more investments, the highest level in six months.
Managers said consumer prices would rise an annual average 4.8% in 2006. They put year-end twelve-month inflation at 5.1%, slightly under their projection in September. Managers said they would raise their own prices 3.6% this year, the same as they said in August.