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Confidence at big companies, SMEs declines in October – Ecostat

  Sentiment at both big Hungarian companies and SMEs sharply worsened in October after slight fluctuation in the preceding five months, the latest measure of confidence by Ecostat reveals.


Ecostat’s TOP-100 index of confidence at Hungary’s biggest hundred companies was 79% in October, slipping 7.5 percentage points from September. The SME confidence index fell 6.3 percentage points to 77.5%. About 48% of big companies said their output remained unchanged in the past three months, and 34% said it would fall in the coming three months a sharp hike from 7% in September.

Rising demand on the domestic market was seen by 28% of companies, and 24% said demand would fall. A little less than one-quarter of companies saw increasing demand on export markets, but 22% said it would drop. The measure of companies’ propensity to make capital expenditures fell to its lowest level of the year in October. About 40% of companies said staff levels were too high, a figure indicating high possibility of layoffs.

Some 47% of SMEs said output remained unchanged in the previous three months and 28% said it fell. One-fifth counted on increasing output in the short term and one-third saw a decline, a sharp hike from 21% in the previous month. SMEs said high taxes and Hungarians’ weak purchasing power were their biggest problems. Just one-fifth saw demand increasing on domestic markets. Only 14% said it would rise on export markets, though 71% said export demand would remain steady. A little more than one-third of SMEs said they planned capital expenditures in the coming twelve months. About 29% of SMEs said they were overstaffed.

Ecostat’s overall measure of confidence was 42.8% in October, down 4.4 percentage points from the monthly average in the previous five months. The measure of sentiment in the construction sector fell a sharp eight percentage points in October as banks tightened lending for infrastructure and property projects because of the global financial crisis. The retail confidence index dropped 5.2 percentage points and the manufacturing confidence index slipped 4.1%. (Reuters)