The GKI-Wallis seasonally adjusted consumer and business confidence index slipped 6.5 to minus 14.5 in June, as consumer confidence continued to wane because of the government's recently announced austerity package.
The consumer confidence index fell 19 to -43.3 in June following a drop of 13 points in May, while the business confidence index declined 2.2 to -4.4.
Government measures announced in May to reduce Hungary's large deficit are widely seen to affect consumers more than businesses. Consumer confidence has not been so low since 1996, when GKI first started compiling the sentiment index. In June, consumers said they expected their financial situations to worsen in the coming twelve months and unemployment to increase. Inflation expectations increased and fewer consumers planned to make big purchases or make savings.
The business confidence index slipped back again in June after showing some improvement in April and May. The outlook in the industrial, construction and trade sectors worsened. The deterioration in the industrial sector came after almost a year of improving sentiment. In spite of an improving stock of orders and increased production, expectations for export orders remained unchanged in June and fewer companies said they planned to increase production. Inflation expectations fell slightly in June, but more companies said they would raise prices, and slightly fewer companies said they planned to make new hires in June than in May.