SME confidence improves in November, but still under level a year earlier

Analysis

Confidence among Hungary's SME managers improved in November compared to the previous month, rising for the first time in three quarters, but it was still under the level a year earlier, Ecostat's latest gauge of sentiment in the sector shows.

Ecostat's SME confidence index measured 43 in November, compared to 40.4 in October and 47.9 in November 2005. The SME managers' outlook for the country's economy improved sharply in November, suggesting a relatively positive response to the budget bill, with nearly a quarter optimistic, compared to just 5% a month earlier. In an assessment of their own situation and outlook, 48% of managers said things would get worse in the coming six months. 27% of managers said, however, that their companies planned to make developments, up from 17% in the previous month. Just under one-quarter of managers said competition on the market would increase, and 34% said they expected a new capital-strong competitor to enter the market. 29% of the managers said the chances of winning orders from a multinational were good, up from 22% in the previous month.

The managers were not as pessimistic about production conditions in November as in October, probably because of foreign investors' positive assessment of the government's austerity program. 39% of the managers said they expected domestic sales to fall, as real wages are expected to fall in 2007. Just 15% expect higher sales in Hungary. 44% said their liquidity situation would remain unchanged in the coming six months. 34% expected financial difficulties, unchanged from the previous month. The managers said consumer prices would rise an annual average 5.4% in 2006, reaching a twelve-month 5.9% in December. They said their own prices would rise 3.7% in 2006. Ecostat projects consumer prices will rise 3.8% in 2006 and over 6% in 2007. (Mti-Eco)

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