Big turning point: Hungarians are more confident about the future

According to the EU-backed survey conducted by GKI Economic Research, Hungarian households and business expectations improved markedly in August. This pushes the GKI’s business sentiment index to a five-month high. In the eighth month of the year, firms’ relatively favourable employment and price-setting intentions remained mostly unchanged compared to July.

The confidence index

As Pénzcentrum wrote the business confidence index is a weighted average of the industrial, trade, construction and services confidence indices. The industrial business confidence index is derived from the responses to questions on business perceptions of orders and inventories as well as production expectations. The construction confidence index is the average of the perception of orders and employment expectations. The trade confidence index is the perception of business and inventory levels and the average turnover expectations. The services confidence index is the perception of business and the average of turnover and employment expectations. The research institute provides seasonally adjusted data to filter out seasonal effects (such as weather, summer holidays and higher demand before Christmas).

The consumer confidence index is compiled from responses to questions on the past and expected development of the financial situation of households, the expected development of the economic situation in the country and the prospects for the purchase of consumer durables.

Business confidence

The GKI business confidence index rose modestly in August. However, this still has not made up for the big drop in June. This month, the sectoral outlook improved, with the exception of construction. In the industry sector, the assessment of production has improved during the summer, the assessment of orders remained the same, while stocks and the outlook for production have improved. On the opposite, in the construction sector, both satisfaction with the last three months’ production and the assessment of orders deteriorated significantly.

In the trade sector, the assessment of the sales position became more unfavourable, while the assessment of orders improved and stocks remained unchanged. Although the overall business climate weakened, turnover expectations for the near future improved slightly in the service sector. In conclusion, construction is the most pessimistic sector, but retailers are also quite gloomy.

The consumer confidence

Public sentiment improved steadily over the summer, with the GKI consumer confidence index reaching a 16-month high this month. In August, all of the consumer confidence indicators moved in a positive direction. Both the assessment of the development of the own financial situation over the past 12 months and expectations for the new 12 months improved. The perception of money to spend on high-value consumer goods also increased. Businesses’ propensity to hire bettered too. The public’s fear of unemployment moved only within the margin of error.