GKI's economic sentiment index edges up in March

According to a survey conducted by GKI with the support of the EU, expectations of all sectors and consumers, with the exception of services, improved slightly.

At the same time, the economic sentiment index did not offset even 60% of its fall in April last year by March this year, the institute notes.

GKI's business confidence index rose to -11.1 points in March, up from -11.5 in the previous month.

Within the business sector, expectations in industry and construction improved most in March. The industrial confidence index has been stagnant with some fluctuations since last November, and industry is currently the most optimistic sector. In March, the evaluation of prospects concerning production, orders (with the exceptions of exports) and inventories became more favorable, whereas that of production of the previous period deteriorated.

Within construction, the outlook for structural engineering did not change in March, and that for civil engineering became more optimistic. However, optimism about production in the preceding quarter reached a one-year high, and the assessment of orders also improved markedly. The trade confidence index rose slightly in March, following a slight decline in the previous month. The assessment of sales positions continues to fluctuate at a very low level. Still, it rose in March, whereas the assessment of expected orders remained unchanged.

The decline in the confidence index of services in March was due to deteriorating sales prospects, GKI explained. The evaluation of the general business climate and recent employment improved.

The willingness of the business sector to employ deteriorated in March, with the exception of industry, and the share of companies planning to reduce rather than increase the number of employees was again higher in trade and services. Although households’ fears of unemployment have been declining for the second month in a row, it remains the main concern for people in general. Intentions to raise prices weakened slightly in all sectors except industry. However, almost half of companies in trade are still preparing to increase prices.

Inflationary expectations by consumers strengthened. Among companies, the assessment of the future of the Hungarian economy deteriorated significantly in March after a three-month improvement, especially in construction. On the other hand, the opinion of households continued to improve.

Consumer confidence also improves

Following a modest decline in February, GKI's consumer confidence index rose slightly in March, to -32.6 from -34.9 back in the previous month.

Still, this may have been due to the fact that the survey took place mainly before the announcement of lockdown restrictions, the institute explains.

In March, households considered their financial situation and savings capacity improving compared to the previous month, while the assessment of the possibility to buy high-value durable consumer goods remained essentially unchanged.