NBU: Business improves its activity expectations

“In April 2023, the BAEI rose to 51.5, up from 49.5 in March, exceeding its neutral level (50 points), which means production is expected to grow,” the press service of the National Bank of Ukraine informs.

The NBU notes that having adapted to the conditions of the full-scale war, businesses have positively assessed the results of their activity compared to the previous month for the first time since October 2021. An improvement in the situation in the energy sector, an increase in the supply of food and fuel, better inflation and exchange rate expectations, and stronger consumer confidence of households had a positive effect on the expectations of businesses across most sectors.

In particular, trading businesses have for the second time provided the most optimistic assessments of results and prospects of their activity: the sector’s index increased to 57.6 in April, from 53.6 in March. The respondents markedly improved their expectations about their trade turnover and purchases of goods for sale. Despite higher assessments of growth in purchasing prices, the respondents expected the trade margin to rise for the first time since July 2019.

Industrial enterprises have been expecting an improvement in their economic performance for the second month in a row on the back of better logistics, lower production costs on restoring the electricity supply, and stabilization of fuel prices: the sector’s index was 50.5 in April, compared to 51.2 in March.

Services companies continued to moderate the negative assessments of their economic prospects thanks to the gradual recovery in demand, and improvement in electricity supply, and the seasonal factor: the sector’s index was 48.8, up from 45.7 in March.

Construction companies provided the most reserved assessments of their economic performance among all other sectors in view of the weak financial capability of consumers, the lack of investment, and unfavorable weather: the sector’s index was 44.9 in April (45.9 in March). In contrast to the previous month, the respondents expected a decline in construction volumes and increased their negative assessments of volumes of new orders.

Despite a certain moderation of their forecasts, most polled companies said they continued to have high expectations of growth in purchasing prices and their selling prices.