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GKI composite confidence index rises to five-year peak in January

GKI's combined gauge of business and consumer confidence measured -6.3 points in January after -7.6 points in December, the economic research company said at the weekend.

The seasonally adjusted index has not been this high since early 2006. The business confidence index rose and the consumer confidence index fell in January 2011.

The components of the index, compiled with the support of the European Union, showed the measures of business confidence rising to 0.5 points in January from -1.8 points, while but the consumer confidence index slipped to -25.8 points from -24.1 points.

The survey shows business expectations have been rising almost steadily since bottoming out in the spring of 2009, while consumer expectations declined for the second consecutive month following a very quick improvement preceding the elections last spring.

The outlook of the industry and construction industry improved slightly, while the outlook of trade companies continued to improve in January. Trade companies' expectations with regard to orders improved considerably, while they assessed their stock of orders as slightly falling and selling positions as slightly deteriorating. The outlook for service companies improved considerably due to more optimistic turnover and headcount expectations.

More companies in the industrial and construction sectors planned to make new hires, while employment expectations deteriorated in the service and trade sectors.

More households, on the other hand, feared unemployment.

Fewer industrial and service companies planned price rises. In the construction sector, companies expecting price cuts continue to outnumber those planning to raise prices.

Among trade companies, however, the percentage of companies planning price increases rose considerably, just as the average rate of the planned price rises.

Households' inflationary expectations strengthened.

The outlook for the Hungarian economy as a whole improved slightly among industrial and service companies, but continued to worsen in the construction sector. Consumers were slightly more optimistic regarding the situation of the country as a whole than in December.

Households were more pessimistic, however, regarding their own financial position and their ability to make savings in the coming twelve months. (MTI-Econews)