Businesses are cautious in assessing their performance and prospects – NBU study
3 January 10:35
The deterioration of the security situation, increased shelling of energy facilities, further growth in business costs for labor, energy and logistics, accelerating inflation, and a shortage of qualified personnel have restrained economic activity and negatively affected the assessment of the state of affairs by enterprises, as evidenced by the index of business activity expectations, which the National Bank calculates monthly. The results of the study were reported by the NBU, Komersant ukrainskyi reports.
As noted, in December 2024, the index of business activity expectations was 45.9 compared to 47.2 in November and was almost at the level of December 2023 – 45.7. The NBU reminded that the index of business activity expectations is a tool for rapid assessment and tracking of economic development trends. The index value of 50 is neutral. Expectations are positive if the index value exceeds the neutral level, and vice versa… restrained if the index falls short of 50.
What sectoral indices were recorded
Unlike in the previous month,trade companies assessed the results of their business activity cautiously, given the difficult security situation and electricity shortages: the sectoral index in December was 49.9 (in November – 51.4, in December 2023 – 46.9). Trade companies were less confident about the increase in turnover, were more cautious about purchases of goods for sale, and downgraded their expectations for inventories of goods for sale. Respondents remained optimistic about a decline in trading margins.
In December,industrial enterprises were more cautious in assessing their current performance, given the shortage of electricity, lack of skilled workers, and higher production costs: the sectoral index in December was 44.6 (in November – 46.7, in December 2023 – 46.9). Respondents lowered their expectations for output, new orders for products, including exports, and work in progress. At the same time, estimates of finished goods stocks and inventories of raw materials deteriorated.
Service companies also slightly weakened their economic outlook amid significant power outages, a shortage of skilled workers, and rising business costs: the sectoral index was 44.5 in December (44.8 in November, 44.0 in December 2023). Respondents expected a further decline in the volume of services provided, new orders for services, and services in progress.
For the second time in a row,construction companies provided the most pessimistic estimates of their current economic performance, given the seasonality of construction work and the decline in investment demand: the sectoral index in December was 43.4 compared to 43.6 in November (in December 2023 – 42.1). Construction workers expect a further decline in construction, new orders, and purchases of raw materials. At the same time, expectations for the volume of purchases of contractor services improved amid growing negative assessments of their availability and accelerating growth in their cost.
Construction and service companies expected an increase in the growth rate of purchase prices and prices/tariffs for their own products/services, while respondents from industry and trade predicted a decline.
The situation on the labor market remains difficult, although expectations for employment have softened somewhat. Respondents in all surveyed sectors were set to reduce the number of employees, while construction, trade, and service companies expected a slowdown in staff reductions, and only industrialists predicted a slight acceleration.
According to the NBU, the monthly survey of enterprises was conducted from December 4 to 23, 2024. The survey involved 508 enterprises. Among them: 44.1% – industrial companies, 26.4% – services, 24.6% – trade, 4.9% – construction. 29.3% of respondents are large enterprises, 28.5% are medium-sized, and 42.1% are small.
33.5% of the surveyed enterprises carry out export and import operations, 9.1% – only export operations, 18.7% – only import operations, 38.8% – do not carry out foreign economic operations.
The NBU also reminded that the survey results reflect only the opinion of the respondents – the heads of enterprises, and not the estimates of the National Bank of Ukraine. Based on the respondents’ answers, monthly indices of business activity expectations are calculated – sectoral (for each sector of the economy) and composite, which characterizes the country’s economic development for the month.
