02 November 2022, Wednesday, 13:42 132

Business In October Worsens Business Activity Expectations Due To Security Situation Complications - NBU Survey

Редактор: Tetiana Herasimova

In October, the business downgraded expectations for its economic activities due to complications of the security situation.

The National Bank announced this, Ukrainian News Agency reports.

According to the report, the negative impact of the full-scale war on the supply of goods, the existing logistical problems, the further destruction of energy capacity and the decrease in real incomes of the population are restraining the economic recovery and causing a deterioration in the expectations of enterprises of all sectors.

This is evidenced by the business activity expectations index (BAEI), which the National Bank calculates monthly, excluding the forced break in March-May this year.

In October 2022, BAEI declined to 44.9 from 46.1 in September.

Industrial enterprises downgraded estimates of the economic outlook due to losses in production and energy capacity: the sector index in October was 45.8, against 47.1 in September.

Respondents have worsened expectations for the volume of new orders for products, including export ones, and also predict a decrease in the volume of stocks of raw materials, materials and residues of finished products.

At the same time, positive expectations for the volume of manufactured products remained.

Construction sector enterprises for the second month in a row had the most consistent estimates of all sectors of the economy relative to their activities: the sector index was 38.2 (in September - 41.0).

Expectations for reduced construction volumes, new orders, procurement of raw materials and materials have increased.

Unlike the previous two months, respondents expect a decrease in the volume of procurement of contractor services.

Trade enterprises in October slightly worsened estimates of their economic activities, but are still the closest to a neutral level: the sectoral index was 48.9, against 49.9 in September.

Respondents slightly worsened estimates on the volume of turnover, discreetly estimated the volume of procurement of goods for sale, noted a decrease in their balances.

Trade enterprises have slightly reduced pessimism in expectations of higher purchase prices and the value of goods, while at the same time increasing expectations for lower trade margins.

Service enterprises also weakened their own expectations, due to further damage to transport, energy infrastructure and a decrease in household incomes: the sector index fell to 42.2 from 43.4 in September.

Respondents increased expectations for a decrease in the volume of services provided, the volume of new orders and services in the process of execution, while weakening expectations for an increase in tariffs for their own services.

Most of the businesses participating in the surveys have slightly dampened expectations for the health of their own products/services amid weakening expectations for rising prices for raw materials and commodities of suppliers.

Businesses in all sectors involved in the survey continue to expect a reduction in the total number of workers.

Trade enterprises provided the least pessimistic estimates.

The monthly survey of businesses was conducted from October 4 to October 24, 2022.

423 enterprises took part in the survey.

Among the surveyed enterprises, 45.4% are companies of industry, 28.1% are services, 22.0% are trade, and 4.5% are construction.

31.0% of respondents are large enterprises, 32.4% are medium, and 36.6% are small.

33.1% of the surveyed enterprises carry out export and import operations, 10.6% - only export operations, 14.7% - only import operations, and 41.6% - do not carry out external economic operations.

As Ukrainian News Agency earlier reported, the results of the surveys reflect only the opinion of respondents - managers of enterprises, and not the estimates of the National Bank.

Monthly business activity expectations index (BAEI) is a tool for operational assessment and tracking of economic development trends. The index is calculated on the basis of surveys of Ukrainian enterprises of the real sector of the economy.

Based on the responses of respondents, monthly indices of business expectations are calculated - sectoral (for each sector of the economy) and composite, which characterizes the economic development of the country for the month.

The index value at 50 is neutral.

Expectations are positive if the index value exceeds the neutral level.

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