The value of GKI's economic sentiment index adjusted for seasonal effects that had been decreasing for nine months-of which the last six months was a heavy fall-remained unchanged in April. According to the survey conducted by GKI Economic Research Co. (www.gki.hu) with the support of the European Union, expectations of consumers became worse but those of the business sphere improved although rather slightly. Improvement in business expectations was the result of the increase in industry and trade confidence indices whereas pessimism in construction and services gained momentum.
In April the confidence index of industry improved slightly for the first time since May 2008. In this improvement the better assessment of the stock of orders and past production played the major role, whereas stocks decreased as well. Nevertheless, the evaluation of future production and export orders deteriorated. Intentions concerning employment were less pessimistic this month.
In construction the confidence index continued to fall in April although the decrease was rather modest. The assessment of production concerning the past three months deteriorated significantly, opinions on stock of orders decreased only slightly whereas intentions to reduce employment picked up somewhat.
In trade the confidence index increased slightly in April, both the expectations concerning sales positions and the assessment of the stock of orders improved. The confidence index of the service sector continued to drop that was mainly the result of falling intentions to employ. Opinions on sales for the near future improved a bit, whereas the assessment of the state of the business stagnated.
In industry and construction expectations of price reductions got stronger but firms in trade as well as consumers expect higher prices. The evaluation of the prospects of the Hungarian economy deteriorated further in construction and among consumers but after a long time it set to improve slightly in industry, trade and services, although compared to a very low base.
GKI's consumer confidence index has been decreasing from month to month since the sharp fall recorded in autumn 2008. The decrease has been in line with EU trends. Fear from unemployment got notably stronger compared to March. The assessment of households concerning their own present and future financial position continued to fall. Present and one-year plans concerning the purchase of high value durables deteriorated, too. (GKI Newsletter April 29)