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GKI Business Climate Index improves slightly in Q3

Hungary's Business Climate Index (UX), a gauge of sentiment at 1,500 businesses in Hungary prepared by economic think-tank GKI jointly with Microsoft Magyarország, improved 2 points to 34 in the third quarter of 2010, GKI said.

The index declined almost steadily between early 2007 and its all-time low in the first quarter of 2009, though rose in the following three quarters. This positive trend was interrupted in the first quarter of 2010, but the index rose perceivably in the second and third quarters. While the index remains under its own long-term average, it exceeds its all-time low by 25 points. Three of the four indices that constitute the index improved significantly from the previous quarter, while one deteriorated significantly.

The number of companies complaining of the negative impact of government unpredictability fell by almost 2 points in the third quarter from the previous quarter, thus this index remains below the long-term average. With regard to this factor, large companies show greater uncertainty than small businesses, contrary to earlier periods.

The number of the businesses complaining about uncertain business conditions fell by 1 point, thus this index also remains below its long-term average.

The interest spread on 10-year Hungarian government bonds rose steadily from early 2008 until Q1 2009, and has been gradually declining since. The index was stagnant in the first and second quarters of 2010 and rose perceptibly in the third. The interest spread is well above its long-term average, thus external investor confidence in the Hungarian economy has not reached the level of its ten-year average.

New car sales started increasing significantly in Q3 2010 after declining steadily since mid-2005. (MTI – Econews)