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Confidence, outlook improves in August

Both consumer and business confidence improved considerably in August 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, rose again, to -9.6 points, after stagnating in July.

The consumer confidence index rose to -23.4 points in August from -29.3 points in the previous month. The business confidence index rose to -4.7 points from -7.1 points.

Household expectations, after rising almost steadily since May 2009 and improving further by early summer partly in connection with the general elections, peaked at the beginning of June, fell in July but returned to their June level in August. Business sector expectations, however, continued improving in July and August, surpassing pre-crisis levels.

The construction sector confidence index stagnated in August, falling within the statistical margin, just as in June and July.

Expectations of trade companies showed the biggest improvement in August. Companies' assessment of their sales position improved markedly as did expectations of orders to producers and wholesalers. The level of inventories also declined slightly.

In the services sector, companies' assessment of their business in the previous period and their employment expectations for the coming three months both deteriorated.

Employment plans improvement in the industrial, trade and services sectors. The biggest improvement was shown by the services sector. Among industrial companies, the number of those planning new hirings has exceeded the number of those planning layoffs for the second consecutive month.

People's fears of unemployment slightly declined compared to the previous month.

In the industrial and trade sectors, the number of companies planning price rises considerably exceeds the number of those planning price cuts; in the service sector, the two groups are almost level; while in the construction sector, those planning to cut prices are in a clear majority.

Consumers' inflationary expectations are unchanged. The assessment of the outlook of the Hungarian economy improved across all sectors. In the industrial, trade and services sectors, optimists now outnumber pessimists, while in the construction sector, there are still more pessimists than optimists.

The biggest improvement in consumer confidence was seen in the measure of households' outlook for their own financial position, but households' expectations of their ability to make savings in the coming twelve months also improved. (MTI-Econews)