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April Business Outlook Survey Shows Business Activity Expectations Index Moving above Equilibrium for First Time in a Year and a Half

April Business Outlook Survey Shows Business Activity Expectations Index Moving above Equilibrium for First Time in a Year and a Half

Having adapted to conditions of the full-scale war, businesses have positively assessed the results of their activity compared to the previous month for the first time since October 2021. An improvement in the situation in the energy sector, an increase in supply of food and fuel, better inflation and exchange rate expectations, and stronger consumer confidence of households had a positive effect on expectations of businesses across most sectors. This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis, except for the forced break in March–May 2022. In April 2023, the BAEI rose to 51.5, up from 49.5 in March, exceeding its neutral level (50 points), which means production is expected to grow.

Trading businesses have for the second time provided the most optimistic assessments of results and prospects of their activity, taking into account a decline in inflationary pressure, a pickup in consumer demand, and an increase in supply of goods: the sector’s index increased to 57.6 in April, from 53.6 in March. The respondents markedly improved their expectations about their trade turnover and purchases of goods for sale. Despite higher assessments of growth in purchasing prices, the respondents expected the trade margin to rise for the first time since July 2019.

Industrial enterprises have been expecting an improvement in their economic performance for the second month in a row on the back of better logistics, lower production costs on restoring the electricity supply, and stabilization of fuel prices: the sector’s index was 50.5 in April, compared to 51.2 in March. The respondents expected an increase – albeit a slower one than in the previous month – in the amount of manufactured goods and the number of new orders, including export orders. Assessments of volumes of unfinished products (unfulfilled orders) remained negative. Meanwhile, expectations of growth in finished goods inventories weakened somewhat.

Services companies continued to moderate the negative assessments of their economic prospects thanks to the gradual recovery in demand, and improvement in electricity supply, and the seasonal factor: the sector’s index was 48.8, up from 45.7 in March. The respondents significantly upgraded their negative expectations of the volumes of new orders, while expecting growth in volumes of services provided and services in progress.

Construction companies provided the most reserved assessments of their economic performance among all other sectors in view of weak financial capability of consumers, the lack of investment, and unfavorable weather: the sector’s index was 44.9 in April (45.9 in March). In contrast to the previous month, the respondents expected a decline in construction volumes and increased their negative assessments of volumes of new orders. Construction companies did not forecast any changes in purchases of raw materials and supplies. At the same time, they continued to expect growth in their purchases of subcontractors’ services.

Despite a certain moderation of their forecasts, most polled companies said they continued to have high expectations of growth in purchasing prices and their selling prices.

The respondents improved their employment assessments: for the first time since January 2022, trading businesses have expected an increase in their staff numbers, while respondents from the rest of the sectors covered by the survey forecast lower rates of staff cuts.

For reference

This survey was carried out from 4 April through 21 April 2023. A total of 481 companies were polled. Of the companies polled, 46.6% were industrial companies, 28.7% services companies, 20.8% trading companies, and 4.0% construction companies; 33.1% of the respondents were large companies, 30.6% medium companies, and 36.4% small companies.

Out of the surveyed companies, 33.5% were both exporters and importers, 8.9% were exporters only, 16.4% were importers only, and 41.2% were 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 the NBU’s forecasts or assessments.

The monthly business activity expectations index (BAEI) is a tool for conducting flash estimates and detecting trends in economic development. The NBU calculates the index based on surveys of Ukrainian companies in the real sector of the economy.

Based on the respondents’ answers, the NBU compiles monthly sector-specific BAEIs (for each sector of the economy) and the aggregate BAEI, which characterizes Ukraine’s economic development in a given month. A value of 50 corresponds to the neutral level. A BAEI reading above the neutral level implies a positive business outlook.

Read more about the April 2023 survey in the Monthly Business Surveys 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 May) will be published on the first business day of June 2023.


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