GKI’s economic sentiment index improves in December

Analysis

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Economic research institute GKI’s economic sentiment index rose sharply in December, almost reaching levels last registered in October.

According to a survey conducted by GKI with the support of the European Union, the improvement was due to more upbeat business expectations, and the pessimism of all sectors decreased notably. The business confidence index rose to -13.1 points in December from -20.4 last month.

Construction sector sentiment somewhat improved, with the outlook for building and civil engineering companies becoming better.

The outlook for production and the assessment of order stock improved in the case of industrial companies. On the other hand, their assessment of inventories became worse.

Service sector outlook improved notably, according to the institute.

Businesses in commerce reported improved assessments of their sales positions and inventory levels. In addition, the outlook for orders recovered after fall last month. 

However, as the Budapest Business Journal reported earlier, GKI's consumer confidence index deteriorated significantly in December after a slight rise in November.  The consumer confidence index slipped to -38.5 points in December from -33 points in the previous month.

GKI says that the different trends of consumer and business expectations recorded over the last two months can be attributed to the fact that the institute always surveys households at the beginning of each month, but asks businesses in the middle of the month. 

In this case, this meant that households did not yet perceive the restrictions brought about by the pandemic in early November, resulting in a higher reported level of consumer confidence last month. GKI also notes that this month, a significant number of companies responded with the knowledge of the EU budget and recovery fund agreement, while the deal was still in limbo when consumer sentiment was surveyed.

The institute's combined gauge of consumer and business confidence rose to -19.7 points in December from -23.7 in November.

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