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Businesses downgrade their performance expectations amid losses from full-scale invasion– business outlook survey in November

Businesses downgrade their performance expectations amid losses from full-scale invasion– business outlook survey in November

In November, businesses continued to suffer losses from the full-scale invasion and terrorist attacks, reporting a gloomier economic outlook. Ongoing hostilities, continued damage to critical infrastructure, disrupted supply chains, rising production costs, and falling household income have worsened the nearest-future economic 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 November 2022, the BAEI was 42.7, down from 44.9 in October.

Industrial companies reported a more negative economic outlook on the back of destroyed production facilities and infrastructure, the sector’s DI being 44.1 in November, compared to 45.8 in October. Respondents downgraded their expectations for the amount of manufactured goods and the number of new orders for products, including export orders. At the same time, expectations for the amount of unfinished products were less pessimistic than in the previous month.

Construction companies slightly softened their negative views of their economic performance in November, the DI being 41.0, up from 38.2 in October. Respondents also softened their expectations about their construction volumes and the number of new orders. With contractors becoming more available, respondents declared intentions to increase purchases of contractor services. Although remaining below the neutral level, expectations for purchases of raw materials and supplies improved noticeably.

More fierce fighting and falling household income worsened the economic outlook of trading companies in November, as the sector’s index dropped to 45.2, down from 48.9 in October.  Respondents downgraded their expectations of their trade turnover and the amount of goods purchased for sale. In contrast to the previous month, respondents expected an increase in their inventories/stocks of goods for sale. Trading companies expected weaker growth in the cost of goods purchased for sale and reported intentions to cut their trade margins.

Disrupted supply chains and rising production costs worsened the economic outlook of services companies, as the sector’s index moved to 40.0, down from 42.2 in October. Respondents reported dimmer expectations for 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 raw material and supplies prices, most of the surveyed companies reported firmer intentions to raise their selling prices.

Respondents across all of the surveyed sectors continued to report intentions to reduce their workforces, with construction companies declaring the strongest intentions.

Background information

This survey was carried out from 3 November through 23 November 2022. A total of 432 companies were polled. Of the companies polled, 45.4% are industrial companies, 27.5% services companies, 22.9% trading companies, and 4.2% construction companies; 30.1% of the respondents are large companies, 31.7% medium companies, and 38.2% small companies.

Of the companies surveyed, 32.2% are both exporters and importers, 10.4% are exporters only, 16.2% are importers only, and 41.2% 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 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 November 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 December) will be published on the first business day of January 2023.


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