In June, businesses reported a negative economic outlook for two months in a row. Continuing uncertainty as to how long the war will last, rising production costs due to power shortages caused by russia’s missile attacks on energy infrastructure, higher energy prices, weak investment demand, deteriorating exchange rate expectations, unfavorable labor market trends, and considerable shortages of qualified staff further worsened the expectations of all of the surveyed sectors.
This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis, apart from the forced break in March–May 2022. In June 2024, the BAEI was 43.6, down from 48.0 in May.
Industrial companies downgraded their economic outlook for the near future amid a worsening security situation, significant power shortages and rising production costs, the sector’s index being 45.5 in June, down from 48.8 in May. In contrast to the previous month, respondents expected a decrease in the amount of manufactured goods and the number of new orders. Respondents reported firmer expectations of a decrease in the number of new export orders, the amount of unfinished products (unfulfilled orders), and in stocks of raw materials and supplies. At the same time, industrial companies slightly upgraded their negative views about their finished goods stocks.
Trading companies remained downbeat about their economic performance on the back of a more difficult situation with power supplies, higher energy prices and worsening exchange rate expectations, the sector’s index being 46.4, down from 47.7 in May. Respondents expected a further drop in their trade turnover and the amount of goods purchased for sale, while continuing to expect a decrease in their stocks of goods for sale. They also declared intentions to cut their trade margins further.
Construction companies considerably worsened their economic performance expectations on the back of depressed investment demand, long power cuts and shortages of qualified staff, the sector’s index being 43.0 in June, down from 49.8 in May. Companies significantly downgraded their expectations for construction volumes, the number of new orders, and purchases of raw materials and supplies. At the same time, respondents remained upbeat about purchases of contractor services, despite worsening their expectations about contractor availability.
Services companies have reported the gloomiest economic outlook for two months running, downgrading their expectations of their economic performance due to outflows of qualified staff, higher costs resulting from power shortages and declining demand, the sector’s index being 39.7, down from 47.2 in May. Respondents reported significantly dimmer expectations about the amount of services provided, the number of new orders, and the amount of services that are being provided.
Industrial, trading and services companies said they expected stronger growth in purchase prices, and declared firmer intentions to raise their selling prices. Meanwhile, construction companies expected slightly weaker growth in purchase prices and reported less firm intentions to raise their selling prices.
Labor market conditions worsened. Companies across all sectors declared intentions to reduce their workforces, with the strongest intentions reported by services companies.
This survey was carried out from 4 June through 21 June 2024. A total of 445 companies were polled. Of the companies polled, 44.5% are industrial companies, 28.3% services companies, 22.0% trading companies, and 5.2% construction companies; 30.3% of the respondents are large companies, 27.6% medium companies, and 42.0% small companies.
Out of the surveyed companies, 31.9% are both exporters and importers, 11.0% are exporters only, 18.4% are importers only, and 38.7% 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 assessments.
The monthly 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 performance 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 June 2024 survey in the Monthly Surveys of Companies Subsection of the Publications Section on the NBU’s official website.
The NBU started posting monthly survey results in the open data format.
The results of the next survey (for July 2024) will be published on the first business day of August 2024.