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Business, consumer confidence move apart in July

Business confidence improved but consumer sentiment worsened in July from a month earlier, the latest measures by economic research company GKI show.

GKI’s combined measure of business and consumer confidence, prepared with support from the European Union, was at 12.9 points in July, level with June. The business confidence index rose to -7.1 points from -9.2 points, while the consumer confidence index fell to -29.3 points from -23.4 points. The consumer confidence index dropped for the first time since April 2009, but was close to its level four years ago, around the time of Hungary’s previous elections.

Business sector confidence continued to improve in July, surpassing pre-crisis levels.

Expectations in the trade and services sectors improved a lot in July.

A slight improvement was seen among industrial companies, while the outlook was unchanged in the construction sector.

In the industrial sector, the outlook for production in the coming three months as well as the assessment for stock of orders improved. Inventories of own products rose slightly, however. Slightly more companies planned new hires than planned layoffs. About as many companies planned price rises as planned price cuts.

The measure of confidence in the construction sector fell slightly, although within the statistical margin of error. Assessments of output in the previous three months and order stock worsened. The sector on average held orders for 3.1 months ahead in July, less than the 3.5 months in April and the four-month orders held a year earlier. The ratio of construction companies planning price reductions rose further.

In the trade sector, companies’ assessment of their sales position improved markedly. Order stock and inventories were also better. No more companies planned layoffs than earlier.

Confidence in the service sector improved further, lifted by assessments of business trends and the outlook for the coming three months. The index of the sector has improved each month since January except for May. Slightly more companies planned to make new hires. Many companies planned price reductions.

The biggest drop in consumer confidence was seen in the measure of households’ outlook for the economy as a whole in the coming twelve months. Households’ outlook for their own financial position and their ability to make savings also worsened. Slightly more households were afraid of job losses. More consumers thought inflation would pick up. (MTI – Econews)