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Businesses Return to Positive Economic Outlook – Business Outlook Survey in September

Businesses Return to Positive Economic Outlook – Business Outlook Survey in September

After reporting guarded expectations for two months running, businesses reported a positive economic outlook in September. The gradual rebound of output, the establishment of new supply routes, weaker growth in the prices of raw materials and energy, improved inflation and exchange rate expectations, and stable domestic demand helped improve respondents’ expectations.

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 2023, the BAEI was 50.1, up from 49.3 in August, exceeding its neutral level of 50 points.

Industrial companies upgraded their economic outlook on the back of the gradual restoration of production, the establishment of new supply routes, and lower inflation – the sector’s index moved to 50.0 in September, up from in 48.8 August. Respondents remained upbeat about the amount of manufactured goods, the number of new orders for products, and about stocks of raw materials and supplies. The number of new export orders for products was expected to remain unchanged on August. Companies reported slightly less pessimistic views about the amount of unfinished products, but were more downbeat about their finished goods stocks.

Construction companies have reported a positive economic outlook for five months running, thanks to reviving demand for mortgage loans issued under preferential government programs, budgetary financing for the construction and restoration of roads, and seasonal factors – the sector’s index was 50.6 in September, down from 51.0 in August. Respondents were slightly more confident about an increase in construction volumes, while also expecting an increase in the number of new orders and in purchases of raw materials and supplies. Companies reported much firmer expectations of a rise in purchases of contractor services and in the cost of these services. Meanwhile, respondents softened their negative expectations about the availability of contractors.

Trading companies have remained the most upbeat among the sectors – they have reported positive performance expectations for seven months in a row amid stable consumer sentiment, an ample supply of goods, and decelerating inflation. The sector’s index was 53.3 in September, up from 52.5 in August. Respondents declared intentions to step up their goods turnover and to purchase more goods for sale. Despite stronger expectations of a rise in purchase prices, trading companies softened their views of a rise in the prices of goods purchased for sale. Respondents remained upbeat about their stocks of goods for sale, while also reporting less firm intentions to cut their trade margins.

Although softening their negative expectations somewhat, services companies were the only sector that continued to report a negative economic outlook due to disrupted logistical chains, higher fuel prices, and depressed demand, the sector’s index being 47.9 in September, up from 47.3 in August. In contrast to the two previous months, respondents said they expected a slight increase in the amount of services provided, and softened their negative views about the number of new orders. At the same time, after reporting positive views for three months running, respondents expected a decrease in the amount of services that are being provided.

Most of the surveyed companies said they intended to raise their selling prices on the back of rising purchase prices.

Staff expectations varied across the sectors. Only trading companies have, for three months in a row, reported intentions to hire more staff. Construction companies expected their staff level to remain unchanged, as was the case in August. Conversely, industrial and services companies still continued to report intentions to cut their workforces.

For reference

This survey was carried out from 4 September through 22 September 2023. A total of 502 companies were polled. Of the companies polled, 45.4% are industrial companies, 28.9% services companies, 20.7% trading companies, and 5.0% construction companies; 32.3% of the respondents are large companies, 29.3% medium companies, and 38.4% small companies.

Out of the surveyed companies, 31.9% are both exporters and importers, 9.6% are exporters only, 15.5% are importers only, and 43.0% 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 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 September 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 October) will be published on the first business day of November 2023.

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