Businesses Downgrade Their Expectations for Their Economic Performance due to Seasonal Factors – Business Outlook Survey in January

In January, businesses downgraded expectations of their economic performance due to seasonal factors. That said, expectations were slightly higher than in January last year.  The index’s subdued performance resulted from seasonal factors, intensified attacks on energy and logistics infrastructure, and energy shortages. Other contributing factors included the rising cost of backup power supplies, logistical hurdles, a shortage of qualified staff, and worsening exchange rate expectations. Ongoing international financial assistance and slowing inflation remained positive drivers.

This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis, apart from a forced break in March–May 2022. The BAEI was 41.3 in January 2026, and while down from 49.2 in December 2025, it was slightly higher than the figure of 41.0 for January 2025. Compared to January 2025, all surveyed sectors, apart from industry, had better performance expectations.

Faced with widespread damage to production facilities, high recovery costs, power outages and a shortage of qualified staff, industrial companies reported more cautious expectations of their current performance than they did last month, the sectoral index being 41.7 in January, compared to 46.5 in December 2025 and 42.0 in January 2025. Respondents expected a further decrease in the amount of manufactured goods, the number of new orders for products, including export orders, and in the amount of unfinished products. Companies also expected a decline in their stocks of raw materials and supplies. Respondents had worsened expectations about their finished goods stocks.

The construction sector reported the most guarded economic outlook of all sectors, weighed down by difficult weather conditions and rising production costs due to power outages, the sectoral index being 37.9 in January, compared to 47.6 in December 2025 and  37.2 in January 2025. In contrast to the previous month, respondents expected a drop in construction volumes and in purchases of raw materials and supplies, while also significantly worsening their expectations for the number of new orders. Respondents were less downbeat about the availability of contractors, while continuing to expect a high cost of contractor services. Meanwhile, expectations for purchases of contractor services were at the level of the previous month.

After nine months of optimism, trading companies downgraded their performance expectations significantly on the back of the usual decline in economic activity in the first month of the year, and due to power outages, the sectoral index being 40.0 in January, compared to 52.2 in December 2025 and 40.0 in January 2025. Respondents expected a decrease in trade turnover, the amount of goods purchased for sale, and in stocks of goods for sale. Respondents continued to report intentions to cut their trade margins.

Service sector companies significantly lowered their economic outlook, citing rising wage and heating costs, logistical hurdles, and shortages of energy and labor, the sectoral index being 42.1 in January, compared to 49.8 in December 2025 and 41.1 in January 2025. In contrast to the previous month, companies expected a drop in the amount of services provided, the number of new orders for services, and in the amount of services that are being provided.

Respondents across all of the surveyed sectors reported intentions to raise their selling prices further on the back of faster growth in purchase prices.

Labor market conditions were unstable. In contrast to the previous month, companies across all of the surveyed sectors said they intended to reduce their workforces, with the industrial sector declaring the strongest intentions.