Businesses Continue to Upgrade Their Performance Expectations – Business Outlook Survey in September

In September, businesses continued to upgrade their performance expectations. The revival of domestic demand, the increased supply of goods, budget funding for infrastructure recovery and road construction, the stable operation of the sea corridor, growth in rail transportation, and seasonal factors helped improve business expectations.

Conversely, missile attacks on critical infrastructure, worsening exchange rate expectations, higher excise taxes on fuel, labor shortages, and accelerating inflation remained restraining factors. 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 September 2024, the index was 48.7, up from 48.4 in August.

Trading companies reported the most optimistic expectations of their performance in the near future on the back of robust consumer demand, a sufficient supply of goods and expanding supply chains, the sector’s index being 52.1 in September, up from 50.4 in August. Respondents were more confident about an increase in trade turnover and the amount of goods purchased for sale, while also improving their expectations about their stocks of goods for sale. Trading companies continued to report intentions to cut their trade margins.

Industrial companies reported positive performance expectations amid stable consumer demand, stepped-up production and reestablished supply chains, the sector’s index being 50.3 in September, up from 48.6 in August. Respondents expected a further increase in the amount of manufactured goods, and in the number of new orders for products. Expectations about the number of new export orders for products came very close to their neutral level. Respondents also reported less pessimistic expectations about a decrease in their stocks of raw materials and supplies. In contrast, expectations about the amount of unfinished products remained guarded. Respondents also downgraded their expectations about their finished goods stocks.

Construction companies continued to report a positive economic outlook, thanks to budgetary financing for road construction and infrastructure, and seasonal factors, the sector’s index being 50.1 in September, down from 50.7 in August. Construction companies expected a further increase in their construction volumes, the number of new orders, and in purchases of raw materials and supplies. Respondents also reported much firmer intentions to purchase more contractor services, while also improving their expectations of the availability of contractors.

In contrast, services companies remained downbeat about their economic performance because of shortages of qualified staff, and higher business costs for labor and backup power supplies, the sector’s index being 44.6 in September, down from 46.5 in August. Respondents reported very cautious expectations about the amount of services provided, the number of new orders, and the amount of services that are being provided.

With stronger growth in purchase prices, companies across all surveyed sectors declared intentions to raise their selling prices.

Labor market conditions remained unstable. Only construction companies reported no intentions to lay off staff.

Managers in other sectors, despite a slight improvement in expectations, continued to declare intentions to reduce their workforces, with the strongest intentions reported by managers in the services sector.