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GKI-Erste confidence index falls further in October

Analysis

Economic think-tank GKI's combined monthly index of business and consumer confidence in Hungary prepared jointly with Erste Bank dropped for the eight consecutive month in October, GKI reported at the weekend.

The seasonally adjusted index fell to -24.0 this month from -20.9 in September, and it is now level with its low at the end of 2008-beginning of 2009, GKI said.

The business confidence index fell 3.2 to -14.9, and the consumer confidence index fell to -49.8 from -47.2 in the previous month.

Within the business sector, only the construction-sector confidence index improved slightly in October, after falling sharply in September from its already low level.

Industrial expectations have been deteriorating for six months, in accordance with European trends. This time, only the assessment of stocks from own production improved compared to the previous month. The assessment of production in the past period and the production outlook for the coming quarter, as well as that of the stock of orders including export orders deteriorated significantly.

The trade sector's confidence index fell sharply in October after a modest correction in September. Expectations concerning orders fell sharply, with selling positions deteriorated and he level of stocks rose slightly.

The index for services fell less than the trade sector index did.

The number of industrial companies planning lay-offs again exceeded the number of those planning to hire new staff, there were weaker intentions to hire in the trade and services sectors but the construction sector showed some strengthening. Consumers' fears of unemployment increased.

Companies in all sectors apart from the construction industry intend to increase prices more than in September, while consumers inflationary fears strengthened further.

The assessment of the position of the Hungarian economy deteriorated sharply in the industry, fell in the trade and service sectors as well as among consumers, and was unchanged in the construction sector.

Consumers are more pessimistic than a month earlier regarding their own financial position in the coming 12 months. Their expectations concerning their own ability to make savings and buy consumer durables in the next 12 months also deteriorated.

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