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January BOS shows that businesses downgrade their performance expectations at the beginning of the year

January BOS shows that businesses downgrade their performance expectations at the beginning of the year

In January, businesses downgraded their views about their economic outlook. This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis. In January 2022, the index was 40.5, down from 48.6 in December 2022, and hitting a low not seen over the last 12 months.

The expectations of all of the surveyed sectors were affected by weaker business activity, which is usually the case at the start of a year, coupled with additional factors, such as a worsening in the coronavirus situation, higher energy prices, and a greater probability of an escalation of the armed conflict.

Companies in the industrial sector reported gloomier expectations of their performance and economic outlook, as the sector’s DI dropped to 42.9 in January, down from 49.0 in December 2021. Respondents downgraded their expectations for the amount of manufactured goods and the number of new orders for products, including export orders, while also expecting an increase in their finished goods stocks.

Trading companies also downgraded their expectations, as the sector’s DI dropped to 40.7 in January, down from 49.6 in December last year. Companies expected a slowdown in their trade turnover and a decrease in the amount of goods purchased for sale. Trading companies said they intended to decrease their trade margins further and expected an increase in stocks of goods purchased for sale.

Services companies have been projecting weaker performance for three months running – on the back of the unfavorable coronavirus situation the sector’s index dropped to 39.5 in January, down from 47.8 in the previous month. Respondents expected a decrease in the amount of services provided, the number of new orders, and the amount of services that are being provided.

The construction sector’s index dropped to 33.0 in January, down from 47.2 in December, dragged down by a seasonal decline in economic activity and a large number of days-off and holidays. Respondents expected a significant decrease in construction volumes, the number of new orders and, consequently, in purchases of raw materials and supplies.

Companies across all sectors reported intentions to raise their selling prices further on the back of higher raw material and supplies prices.

The labor market saw a drop in supply, while employment expectations declined. Respondents across all sectors, apart from the trading sector, reported intentions to cut staff.

Background information

This survey was carried out from 5 January through 24 January 2022. A total of 408 companies were polled. Of the companies polled, 44.4% are industrial companies, 29.4% services companies, 20.6% trading companies, and 5.6% construction companies; 31.6% of the respondents are large companies, 29.7% medium companies, and 38.7% small companies.

Of the companies surveyed, 37.7% are both exporters and importers, 10.5% are exporters only, 13.5% are importers only, and 38.2% are neither exporters nor importers.

The findings presented reflect only the opinions of the respondents (top managers of Ukrainian companies), and should not be considered as NBU forecasts or assessments.

The business activity expectations index (BAEI) is a tool for conducting latest assessments and detecting trends in economic development. It is calculated on the basis of surveys of Ukrainian real sector companies.

Monthly business activity expectations indices are calculated on the basis of respondents’ replies. These indices are as follows: sectoral indices (for each sector of the economy) and a composite index (describes the country’s economic development over a month). A value of 50 corresponds to the neutral level. Index values above the neutral level indicate positive expectations.

Read more about the January 2022 survey in the Monthly Surveys of Companies Subsection of the Publications Section on the NBU’s official website.

The NBU has started posting monthly survey results in the open data format.

The results of the next survey (for February) will be published on the first business day of March 2022.

 

 

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