Businesses have adapted to the difficult conditions of the full-scale war and have been reporting an optimistic performance outlook for three months running.
The optimistic outlook resulted, among other things, from weaker growth in the prices of raw materials and energy, the gradual reestablishment of production and supply chains, improved inflation and exchange rate expectations, and a revival of domestic demand.
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 June 2023, the BAEI remained above its neutral level of 50 points, totaling 50.8, compared to 50.5 in May.
Construction companies were the most upbeat about their performance thanks to favorable weather, the need to expand logistical routes in western regions, and to construct and repair roads, the sector’s index being 58.6 in June, up from 51.3 in May. Respondents reported much firmer expectations of a rise in construction volumes, the number of new orders and in purchases of raw materials and supplies. They also remained moderately upbeat about an increase in purchases of contractor services, while also decreasing their expectations of the availability of contractors to a neutral level.
Trading companies have reported positive performance expectations for four months in a row on the back of stable consumer sentiment, an expanding supply of goods, and decelerating inflation, the sector’s index being 52.5 in June, down from 52.7 in May.
Respondents expected an increase in their trade turnover and the amount of goods purchased for sale. As in the previous month, companies expected a slower rise in the cost of goods purchased for sale and in purchase prices, while also once again declaring intentions to cut their trade margins.
Industrial companies reported a more optimistic economic outlook, due to slower growth in raw material and energy prices, reestablished production and supply chains, and declining inflation, the sector’s index being 51.0 in June, up from 50.4 in May. Respondents continued to expect an increase in the amount of manufactured goods and the number of new orders for products. In contrast to the previous month, they expected a drop in the number of new export orders, while also softening somewhat their negative expectations for the amount of unfinished products (unfulfilled orders).
For two months running, services companies have been the only companies across all sectors to report a negative economic outlook because of households’ weak purchasing power, depressed demand and logistical hurdles. The sector’s index was 48.9, unchanged on May. Respondents reported dim expectations for the number of new orders. At the same time, for three months in a row, they have been expecting an increase in the amount of services provided and the amount of services that are being provided.
Although some companies softened their views, respondents continued to report strong expectations of a rise in purchase prices, while also declaring firm intentions to raise their selling prices.
Staff expectations vary across sectors. Respondents from construction and services companies, for the first time in a long time, declared intentions to hire more staff, while industrial and trading companies reported intentions to cut their workforces.
This survey was carried out from 5 June through 22 June 2023. A total of 491 companies were polled. Of the companies polled, 45.2% are industrial companies, 28.9% services companies, 21.0% trading companies, and 4.9% construction companies; 32.4% of the respondents are large companies, 30.5% medium companies, and 37.1% small companies.
Out of the surveyed companies, 32.2% are both exporters and importers, 9.8% are exporters only, 16.9% are importers only, and 41.1% 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 performance 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 June 2023 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 July) will be published on the first business day of August 2023.