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May BOS shows businesses gradually recovering positive sentiments

May BOS shows businesses gradually recovering positive sentiments

Businesses upgraded their expectations for their May performance and future prospects on the back of a gradual easing in quarantine restrictions. This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis. In May 2021, the index, for the second time since the start of the current year, moved above its equilibrium level of 50 points, to 50.5, up from 46.9 in April.

In May, companies across most of the surveyed sectors reported optimistic expectations of their business performance – the indices of the industrial and services sectors moved above their neutral levels, while that of the trade sector came close to its neutral level. At the same time, following the significant improvement seen last month, the sectoral index of construction companies moved below its equilibrium level, dragged down by the pessimistic views expressed by some companies. 

Industrial companies upgraded their expectations of their business performance amid benign external and internal environments – the sector’s index was 50.8 in May, up from 49.8 in April. Respondents continued to report firm expectations for the amount of manufactured goods, while also markedly upgrading their expectations for an increase in the number of new orders, including new export orders. 

Services companies improved their expectations of their business performance most of all, with the sector’s index moving to 50.7 in May, up from 48.8 in April. Respondents expected an increase in the amount of services provided, the number of new orders, and the amount of services being provided, while also intending to raise their selling prices slightly on the back of high purchase prices 

Trading companies also improved their expectations of their economic performance – the sector’s index rose to 49.9 in May, almost reaching the equilibrium level (compared to 48.9 April). Respondents expected a gradual rise in the amount of goods purchased for sale, and a slight decrease in trade turnover and the trade margin. For the first time since October 2019, respondents in the trade sector reported intentions to expand their workforces slightly.

Residential housing and non-residential facility construction companies downgraded their performance expectations somewhat – the sector’s index dropped below its neutral level, to 49.4, down from 51.5 in April. Respondents continued to report firm expectations for a rise in supplier prices, the cost of contractor services, and their selling prices. At the same time, respondents were upbeat about the number of new orders, purchases of raw materials and supplies, and the availability of contractor services. Constriction volumes were expected to remain at last month’s level.

Companies across all sectors continued to expect a rise in their selling prices on the back of higher raw material and supplies prices.

Staff expectations remained guarded – companies across all sectors, apart from the trade sector, reported no intentions to expand their workforces. 

Background information

This survey was carried out from 5 May through 24 May 2021. A total of 309 companies were polled. Of the companies polled, 43% are industrial companies, 28.2% companies in the services sector, 23.6% trading companies, and 5.2% construction companies; 35.3% of the respondents are large companies, 30.7% medium companies, and 34.0% small companies. 

Of the companies surveyed, 36.6% are both exporters and importers, 12.0% are exporters only, 16.5% are importers only, and 35.0% 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 May 2021 survey in the Monthly Surveys of Companies Subsection of the Publications Section.

The results of the next survey (for June) will be published on the first business day of July 2021.


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