In December, businesses continued to downgrade their expectations for their economic activity. More pronounced negative consequences of hostilities, the risk of further terrorist attacks on critical infrastructure and the large amount of time needed to repair it, declining production, and falling real household income made it more difficult to conduct economic activity, while also worsening 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 December 2022, the BAEI was 42.1, down from 42.7 in November.
Industrial companies reported a more negative economic outlook on the back of power cuts, the sector’s DI being 43.4 in December, compared to 44.1 in November. Respondents reported dimmer expectations for the amount of manufactured goods and the amount of unfinished production. At the same time, expectations were less downbeat about the number of new orders for products, including export orders. Respondents somewhat softened their expectations of a rise in raw material and supply prices, while also reporting less strong intentions to raise their selling prices.
Construction companies reported the most guarded views about their economic performance amid weak demand for housing, rising production costs, frequent blackouts, and seasonal factors: in December the sector’s DI dropped to 35.6, down from 41.0 in November. Respondents had significantly dimmer expectations for the number of new orders, while also expecting a sizeable decrease in purchases of raw materials and supplies. Companies downgraded their expectations of the amount of construction work done.
Trading companies reported a more negative outlook for their economic activity amid blackouts and weaker consumer demand due to declining household income, the sector’s DI being 42.1 in December, down from 45.2 in November. Respondents downgraded their expectations of their trade turnover and the amount of goods purchased for sale. With firm expectations of a rise in supplier prices and in the cost of goods purchased for sale, trading companies continued to report intentions to cut their trade margins.
Although softening their negative expectations somewhat, services companies continued to report a gloomy economic outlook because of the impossibility of fully reestablishing logistical chains and due to depressed demand, the sector’s DI being 41.8 in December, up from 40.0 in November. Respondents reported less pessimistic expectations of a decrease in the amount of services provided, the number of new orders, and the amount of services that are being provided.
On the back of strong expectations of a rise in supplier prices, most of the surveyed companies continued to report intentions to raise their selling prices.
Respondents across all of the surveyed sectors continued to report intentions to reduce their workforces. Construction companies had the most pessimistic expectations for their staff numbers.
This survey was carried out from 5 December through 22 December 2022. A total of 433 companies were polled. Of the companies polled, 46% are industrial companies, 27.7% companies in the services sector, 21.9% trading companies, and 4.4% construction companies; 30.7% of the respondents are large companies, 31.6% medium companies, and 37.6% small companies.
Of the companies surveyed, 31.2% are both exporters and importers, 10.2% are exporters only, 16.2% are importers only, and 42.5% 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 December 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 (January) survey will be published on the first business day of February 2023.