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Consumer-business confidence reaches new low in December

Economic think tank GKI's seasonally-adjusted combined consumer-business confidence index, prepared with EU support, reached a historical low in December, though the indicator fell at a slower pace than in November, GKI said.

The combined consumer- business confidence index dropped to -36.7 points in December from -33.3 points in November. In October, the index stood at -17%.

The business confidence index fell to -28.2 points in December from -25.1 points in November. In December 2007 the index stood at -7 points.

GKI's measure of consumer confidence dropped to -60.8 points in December from -56.7 points in November and -47.1 points in the same month a year earlier.

Businesses' outlooks, especially in the industrial and service sectors, worsened at a far slower pace in December than in November, GKI said. The outlook in the construction sector even improved slightly.

Industrial companies' assessment of production and order stock worsened. But the evaluation of stocks of their own products improved. Plans for price changes were the same as in November, but fewer companies planned new hires.

In the construction sector, the assessment of production continued to worsen, but that for stock of orders was unchanged. Slightly more companies planned to make new hires. A little more than half of companies plan to cut their prices, though the number that want to raise prices grew.

Trade companies' stock levels were little changed in December. But the assessment of stock of orders and market position worsened. Few trade companies planned to raise prices.

In the service sector, companies saw the chances for generating more turnover and making new hires narrowing.

Companies in nearly all sectors said the outlook for the Hungarian economy had worsened, though building companies said their outlook for the economy was unchanged.

Hungarian companies see the global economic crisis causing demand to fall and plan to cut costs as a result. Three-fourths of industrial companies see sales possibilities narrowing. Just 2% expect more business.

Different sectors plan to deal with the crisis in different ways. Vehicle manufacturing, machinery and woodworking companies plan the biggest layoffs; drug and chemicals companies are putting off developments; many light industrial companies are relying on innovation to help them through the period; and makers of metal and plastic products could change their profiles.

Hungarian consumers said the outlook for their financial situations had worsened in December. Inflation expectations were little changed, and about the same number of households said they could not make savings. At the same time, households' assessment of their current financial situation improved slightly and more said they planned big ticket purchases. (MTI – Econews)