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Consumer, business confidence index continues to improve in May

GKI's combined business- and consumer-confidence index rose to -14.0 points in May from -17.2 points in April, the economic think tank said on Tuesday.

The index, prepared with European Union support, shows the measure of business confidence rose to -8.8 points from -10.2 points, while the consumer- confidence index climbed to -28.7 points from -37.0 points, its highest level since May 2006.

The index has been rising for a year now, particularly the consumer-confidence index jumped, but the business-confidence index also reached a level above that of September 2008, the last month before the crisis.

Within the business sector, expectations in the industrial and construction sectors improved, while those of trade and service companies deteriorated from the previous month. The marked improvement seen in the industry since twelve months ago continued after a halt in April. The assessment of the stock of orders was much better in May, especially that of export orders, however, the assessment of the production outlook remained unchanged. Nevertheless, more companies said they expected to see an improvement in the production outlook than those who said it would deteriorate among small companies as well, although small companies are typically the lest optimistic.

The construction sector confidence index rose again as assessment of output and order stock improved.

Confidence among wholesalers and retailers showed a marked rise in the first four months, but declined slightly in May. Sales positions and the outlook for orders deteriorated, while companies assessed the size of their inventories as smaller than in April.

Sentiment in the service sector stagnated between November last year and March 2010, improved considerably in April, then dropped again in May.

With the exception of the service sector, more companies now planned to make new hires than those planning lay-offs, and people's unemployment worries lessened considerably.

Industrial and trade companies continue to expect rising prices. In the construction and service sectors, there are still more companies expecting to see falling prices than those planning price rises. Consumers' inflationary expectations lessened perceptibly.

With the exception of the service sector, the assessment of the outlook for Hungary's economy continued to improve in both the business sector and among consumers, in fact, more companies in the industrial and trade sectors said they expected to see an improvement than those expecting to see deterioration.

GKI's consumer-confidence index rose spectacularly further in May following the general elections. While households' outlook for their own financial position improved considerably, but the number who thought they could make savings in the near future rose only slightly and the number of those who thought they could afford to purchase high-value consumer durables in the near future remained unchanged. (MTI-ECONEWS)