In October, businesses reported a more pessimistic economic outlook amid worsening security. The negative impact of the full-scale war on the supply of goods, existing logistical hurdles, destroyed production facilities, and a decline in real household income are restraining economic recovery, while also worsening expectations across all 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 October 2022, the BAEI was 44.9, down from 46.1 in September.
The loss of production and energy facilities increased industrial companies’ negative expectations, as the sector’s DI dropped to 45.8 in October, down from 47.1 in September. Respondents downgraded their expectations for the number of new orders for products, including export orders. They also expected a decrease in their stocks of raw materials and supplies and in their finished goods stocks. At the same time, industrial companies remained upbeat about the amount of manufactured goods.
Construction companies have reported the most guarded performance expectations across all sectors for two months in a row: the sector’s index was 38.2, down from 41.0 in September. Respondents reported firmer expectations for a drop in construction volumes, the number of new orders, and in purchases of raw materials and supplies. In contrast to the two previous months, respondents expected a decrease in purchases of contractor services.
Although downgrading slightly their expectations of their economic outlook for October, trading companies remained the closest to the neutral level: the sector’s index was 48.9, down from 49.9 in September. Trading companies said they had somewhat dimmer expectations for their trade turnover, and continued to report guarded expectations for purchases of goods for sales, while also reporting a drop in their stocks of goods for sale. Respondents reported slightly less firm expectations of a rise in purchase prices and in the price of goods purchased for sale. At the same time, they reported stronger intentions to cut their trade margins.
On the back of further damage done to transportation and energy-generating infrastructure and falling household income, services companies reported a more pessimistic economic outlook, the sector’s DI being 42.2, down from 43.4 in September. Respondents reported firmer expectations of a decrease in the amount of services provided, the number of new orders, and the amount of services that are being provided. At the same time, they reported weaker intentions to raise their selling prices.
On the back of weaker expectations of a rise in raw material and supplies prices, most of the surveyed companies reported slightly less firm intentions to raise their selling prices.
Respondents across all of the surveyed sectors continued to report intentions to reduce their workforces. Trading companies reported the least pessimistic expectations.
This survey was carried out from 4 October through 24 October 2022. A total of 423 companies were polled. Of the companies polled, 45.4% are industrial companies, 28.1% services companies, 22.0% trading companies, and 4.5% construction companies; 31.0% of the respondents are large companies, 32.4% medium companies, and 36.6% small companies.
Of the companies surveyed, 33.1% are both exporters and importers, 10.6% are exporters only, 14.7% are importers only, and 41.6% 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 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 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 October 2022 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 November) will be published on the first business day of December 2022.