In February, the business softened negative assessments of its current results and prospects for its activities. This is evidenced by the monthly index of business activity expectations (IODA) calculated by the National Bank, with the exception of the forced break in March – May 2022.
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In February 2024, IOD increased to 47.5 from 41.0 in January.
“At the same time, high security risks, delays in the receipt of external financing, logistical problems due to the blocking of the western border, weak investment demand, a significant shortage of qualified personnel, as well as a seasonal weakening of economic activity at the beginning of the year continued to constrain the economic activity of enterprises and negatively affected on their expectations,” the regulator said in a statement.
Trading enterprises
Trading enterprises are the only ones among the surveyed sectors who positively assessed their business activity due to the reduction in inflationary pressure, maintaining the stability of the foreign exchange market and well-established consumer demand: the sectoral index rose to 50.1 in February from 38.9 in January.
In contrast to the previous two months, trading companies predicted an increase in the volume of trade turnover and purchases of goods for sale, and also improved estimates for the balance of goods for sale.
As a result of an increase in logistics costs due to the blocking of the western border, respondents expected a significant increases in the cost of goods purchased for sale, at the same time, weakened estimates of the decrease in trading margins.
Industrial enterprises
Industrial enterprises softened, but maintained pessimistic expectations regarding the results of their economic activities, given the high security risks and logistical problems due to the blocking of the western border: the sectoral index in February was 48.3 (in January – 43.7).
< p>Unlike the previous month, respondents predicted an increase in production volumes. Negative assessments have softened both in terms of the volume of new orders for products, including exports, and in terms of balances of finished products.
Forecasts for a reduction in the volume of work in progress, as well as inventories of raw materials and materials, remained unchanged. Against the backdrop of weakening expectations for rising prices for raw materials and materials, industrialists predicted a slower rise in prices for their own products.
Service sector enterprises
Service sector enterprises also softened, but retained negative assessments of their economic prospects, Given increased security risks, increased logistics costs and weak demand: the sectoral index was 45.3 compared to 40.4 in January.
Respondents expected a slower decrease in the volume of new orders, services provided and services in progress, and also predicted a slowdown in the growth rate of both purchase prices and the cost of their own products/services.
Construction enterprises
For the fifth month in a row, construction companies provided pessimistic assessments of their economic performance among the surveyed sectors, given the seasonal weakening of economic activity, weak investment demand and a significant shortage of qualified personnel: the sector index was 43.7 compared to 31.9 in January.
Respondents significantly weakened negative assessments of construction volumes, new orders, purchases of raw materials and materials.
Builders also softened pessimistic assessments of the availability of contractors, while at the same time did not predict changes in the volumes of purchases of their services, despite expectations of significant accelerating the growth rate of the cost of these services.
Expectations for growth in purchase prices have weakened slightly, relative to the rise in prices of their own products – they have remained at a high level.
Employment estimates remain restrained
Managers of trade enterprises expect a slight increase in the number of employees, the rest of those surveyed predict lower rates staff reductions, the most difficult situation is in the construction sector.
Survey
The monthly survey of enterprises was conducted from February 5 to February 22, 2024. 448 enterprises took part in the survey. Among the surveyed enterprises, 45.3% are industrial companies, 28.3% are service companies, 21.7% are trade companies, 4.7% are construction companies; 33.5% of respondents are large enterprises, 28.1% are medium-sized, 38.4% are small.
33.3% of surveyed enterprises carry out export and import operations, 10.3% – only export operations , 16.1% – only import transactions, 40.4% – do not carry out foreign economic transactions.
The regulator notes that the survey results reflect only the opinion of respondents – enterprise managers, and not NBU estimates.
