Business confidence indicators describe the general situation in the sector and are obtained by conducting business surveys in industry, construction, retail trade and services. If the indicator is above zero, there is a positive business environment, if below zero – negative mood of entrepreneurs, reminds the CSB.
According to seasonally adjusted data, the retail confidence indicator has risen to 4.4 in March this year. Compared to February, this indicator has improved only slightly – by 0.1 percentage points. Compared to the previous month, the mood of retailers in food retail has improved, but with the onset of spring and a significant rise in prices, fuel retailers were particularly optimistic in March. In this sector, the confidence indicator has increased by 22.3 percentage points and reached 9.1.
At the same time, the mood of entrepreneurs in the trade of non-food products, as well as cars and their parts, has deteriorated compared to February. However, the lowest confidence indicator in March was in the car maintenance and repair sector (-9.5). Compared to February, it has decreased by 16 percentage points.
In March, 19% of retailers stated that they did not feel any restrictions on their economic activity, and this is the highest value of this indicator since October last year. Compared to February, the share of retailers who cited insufficient demand and labor shortages as a limiting factor for their operations has decreased. In March, they account for 29% and 16% respectively. On the other hand, the share of retailers experiencing financial difficulties has significantly increased (14%).
As usual, retailers are also constrained by competition in their retail sector (37%). Only 16% of respondents have mentioned the impact of Covid-19 as a significant factor limiting their economic activity, but the same number of respondents believe that their activities are directly or indirectly negatively affected by the war in Ukraine and related sanctions. 4% of respondents mentioned the increase in prices as a limiting factor, which is partly related to hostilities, reports the CSB.
In the services sector, in March 2022, according to seasonally adjusted data, the confidence indicator is negative (-2.1). Entrepreneurial sentiment has deteriorated by 8.5 percentage points compared to February. As usual, sentiment indicators vary significantly across service sectors, and trends also vary depending on the specifics of the industry, seasonal effects and the extent to which Covid-19 restrictions and hostilities in Ukraine affect the industry.
In several sectors, where business sentiment indicators were positive in February, they decreased significantly in March: in insurance – by 35.5, in air transport – by 35, in travel agency and tourism reservation services – by 34.8, and in computer programming – by 16.7 percentage points. However, there are also service sectors where business sentiment continues to improve. For example, the confidence indicator in accommodation has improved by 16.7 percentage points and reached a positive value for the first time since September last year (4.3).
Analyzing the components of the confidence indicator in the services sector, it can be seen that the sharp deterioration in sentiment is mainly due to the opinion of entrepreneurs that the demand for their services is expected to decrease in the next three months. According to the CSB data, the general mood in March was positive in 12 and negative in 18 service sub-sectors.
In March, 32% of respondents in the services sector did not experience any factors restricting economic activity. Compared to February, their share has decreased by 3 percentage points. 27% of service sector entrepreneurs are severely constrained by insufficient demand and 15% by labor shortages. The proportion of respondents who say that the effects of Covid-19 are a major constraint on successful economic activity has fallen to 10%, while 13% note that their activities are directly or indirectly constrained by hostilities in Ukraine and related sanctions. 4% of respondents note an increase in prices, which increases costs for businesses.
According to seasonally adjusted data, the confidence indicator in construction in March is -15.5, which is a decrease of 12.2 percentage points compared to the previous month. Compared to February, entrepreneurs’ assessment of the level of construction orders has deteriorated in March, as well as less optimistic forecasts for the expected development of employment in the next three months. The confidence indicator has decreased in building construction, but has increased in civil engineering and specialized construction.
In March, the construction sector was most affected by bad weather (indicated by 33% of respondents, which is 15 percentage points less than in March last year) and insufficient demand (noted by 31% of surveyed entrepreneurs). The share of enterprises whose economic activity is limited by the lack of materials or equipment has increased 2.1 times (26% of respondents).
In manufacturing, the confidence indicator deteriorated by 3.2 percentage points in March compared to February and is -1.3. This was due to less optimistic forecasts of the company’s managers for the activity of their company for the next three months, as well as a more negative assessment of the current level of orders.
According to the CSB, the largest decrease in the confidence indicator compared to the previous month is in the manufacturing industries such as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of electrical equipment, repair and installation of machinery and equipment, printing and reproduction of recorded media, manufacture of wearing apparel, furniture and other manufacture of machinery and equipment nec. The increase is in the manufacture of computer, electronic and optical products, rubber and plastic products, textiles, and cars, trailers and semi-trailers.
Compared to February, the number of respondents who indicated insufficient demand and labor shortage as factors limiting production (26% and 22% of the surveyed entrepreneurs, respectively) have decreased. On the other hand, the impact of lack of materials or equipment and financial difficulties has increased (indicated by 24% and 13% of respondents, respectively).
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