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GKI-Erste confidence index reaches bottom for this year

Economic think-tank GKI's combined monthly index of business and consumer confidence in Hungary prepared jointly with Erste Bank dropped for the fourth consecutive month in August, falling to -18.9 this month from -16.0, GKI reported on Sunday.

GKI said business and consumer expectations last stood at this level in March 2010.

Within the business sector, expectations in August deteriorated, to a lesser degree within the industrial and construction-industry sectors and to a greater degree among companies operating in retail and in services. The industrial confidence index continued to decline, as it has been for almost six months.

GKI said that production has been lower-than-expected recently, while the future production outlook is stagnant and the appraisal of stock of orders has weakened. Self-produced stocks have declined.

The construction-industry confidence index, low to begin with, has been declining for the past four months, although to a lesser degree in August than over the previous months. The assessment of the level of production over the past quarter has dropped significantly, while that for stock of orders has decreased somewhat compared to that in the previous month.

The retail confidence index declined to a much greater magnitude in August than it rose in July. Sales positions and stock of orders decreased significantly, while stocks improved to a moderate degree. Expectations with regard to turnover and intention to hire new employees declined in August.

The intention to make new hires in the industrial and service sectors declined moderately, while that in the construction industry and retail sector improved to a modest degree. Unemployment concerns declined somewhat among consumers.

The intention to alter prices was unchanged in the industrial and construction sectors, while the intention to raise prices increased among companies operating in the retail and service sectors. Inflation expectations among households rose. Expectations with regard to the overall Hungarian economy deteriorated significantly in every segment of the business sector, though improved somewhat among households.

GKI's consumer confidence index rose to a minimal degree in August after declining almost continually since March. The appraisal of households regarding their personal financial situations, the number of unemployed and the outlook for the Hungarian economy improved somewhat in August as compared to July. Households are still postponing purchases of durable consumer items.