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November BOS shows that businesses downgrade their performance expectations on the back of tighter quarantine restrictions

November BOS shows that businesses downgrade their performance expectations on the back of tighter quarantine restrictions

In November, 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 November 2021, the index was 49.8, down from 51.4 in October, dropping slightly below its neutral level for the first time in the last seven months (since May 2021). Surging energy prices, shortages of raw materials, higher production costs and an increase in COVID-19 cases, both in Ukraine and globally, weakened expectations in most of the surveyed sectors. 

Services companies had the strongest response to tighter quarantine restrictions, downgrading their expectations of their economic performance, as their DI dropped below its equilibrium level, to 48.8 in November, down from 51.3 in October. Companies expected no change in the amount of services provided and the number of new orders for services.

Trading companies expected no change in their performance, the sector’s DI being 50.0 in November, down from 52.2 in October. Respondents remained upbeat about their trade turnover and the amount of goods purchased for sale. Despite strong expectations of an increase in purchase prices, almost one third of trading companies said they intended to decrease their trade margins.

The expectations of construction companies have been practically at the neutral level for two months running, the DI being 50.4 in November, compared to 50.2 in October. Respondents somewhat upgraded their expectations for the volume of construction work done, the number of new orders, and purchases of contractor services. At the same time, they reported very strong intentions to raise their selling prices.

Industrial companies continued to report positive expectations for their economic performance and outlook, despite lowering them further, the sector’s DI being 50.7, down from 51.1 in October. Respondents slightly upgraded their expectations for the amount of manufactured goods. At the same time, respondents had more restrained views about the number of new orders, including export orders.

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

Companies downgraded their employment expectations – respondents across all sectors reported no intentions to expand their workforces. Construction companies had the most pessimistic employment expectations, while services companies retained their neutral expectations.

Background information

This survey was carried out from 4 November through 23 November 2021. A total of 385 companies were polled. Of the companies polled, 43.4% are industrial companies, 28.6% companies in the services sector, 22.6% trading companies, and 5.5% construction companies; 33.2% of the respondents are large companies, 30.4% medium companies, and 36.4% small companies. 

Of the companies surveyed, 36.9% are both exporters and importers, 9.4% are exporters only, 16.1% are importers only, and 37.7% are neither exporters nor importers.

This survey only reflects the opinions of the respondents (top-managers of Ukrainian companies), and does not represent the NBU’s 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 November 2021 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 December) will be published on the first business day of January 2022.

 

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