Businesses assess their economic performance guardedly - NBU

In October, businesses returned to reporting guarded expectations for their current economic performance.

This is evidenced by the business activity expectations index (BAEI), which the National Bank of Ukraine calculates on a monthly basis, apart from the forced break in March–May 2022, Ukrinform reports with reference to the central bank’s press service.

“Persisting considerable security risks, the destroyed production facilities of some companies, logistical hurdles faced by exporters, narrowing investment demand, rebounding fuel price growth, and substantial shortages of qualified staff constrained economic activity and worsened expectations,” the report says.

In October 2023, the BAEI dropped below its neutral level of 50 points, to 49.6, down from 50.1 in September.

Trading companies have remained the most optimistic among other sectors – they have reported a positive economic outlook for eight months running, thanks to sustained domestic demand, the stable functioning of the energy system, and a sufficient supply of goods, the sector’s index being 53.0 in October, down from 53.3 in September.

Industrial companies have expected no changes in their economic performance for two months in a row, in spite of optimized production/logistical chains and decelerating inflation. The sector’s index was 50.0 in October, unchanged on the previous month.

After reporting a positive economic outlook for five months in a row, in October, construction companies expected weaker economic performance on the back of a seasonal decline in economic activity, narrowing investment demand, and shortages of qualified staff, the sector’s index being 44.8, down from 50.6 in September.

In October, services companies continued to report a pessimistic economic outlook because of ongoing rises in fuel prices, logistical hurdles and weak demand, the sector’s index being 47.2, down from 47.9 in September.

It is noted that with rising raw material and supplies prices, most respondents declared intentions to raise their selling prices.

Staff expectations have worsened. Respondents across all sectors reported intentions to reduce their workforces.

This survey was carried out from 5 October through 24 October 2023. A total of 505 companies were polled. Of the companies polled, 45.3% are industrial companies, 28.5% services companies, 21.4% trading companies, and 4.8% construction companies; 32.3% of the respondents are large companies, 29.5% medium companies, and 38.2% small companies.