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April BOS shows worsened sentiments among businesses on the back of tighter quarantine restrictions

April BOS shows worsened sentiments among businesses on the back of tighter quarantine restrictions

Businesses downgraded expectations for their April performance and future prospects in response to the stricter quarantine and growing uncertainty. This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis. In April 2021, the index again moved below its equilibrium level of 50 points, to 46.9, down from 51.4 in March.

In April, companies across most of the surveyed sectors reported pessimistic expectations of their business performance – the indices of the industrial, trade and services sectors moved below their neutral levels. Meanwhile, construction companies reported optimistic expectations for the first time since September 2019.

After being optimistic for two months, industrial companies’ expectations of their economic performance worsened – the sector’s index was 49.8 in April, down from 52.3 in March. Industrial companies expected a surge in raw material and supplies prices and selling prices, while remaining upbeat about the number of new orders and the amount of goods manufactured. Respondents from industrial companies said that the number of new export orders would remain unchanged.

Trading companies also worsened their expectations of their business performance, as the sector’s DI dropped to 48.9 in April, from 52.2 in March. Respondents expected a decrease in the amount of goods purchased for sale. With firmer expectations of a rise in purchase prices, trading companies reported stronger expectations of a rise in the price of goods purchased for sale and a decrease in the trade margin. At the same time, respondents expected a slight increase in trade turnover.

Companies in the services sector responded most strongly to the stricter quarantine, significantly worsening expectations of their economic performance – the sector’s index was 43.0, down from 51.4 March. Respondents expected a drop in the amount of services provided, the number of new orders, and the amount of services being provided, while also intending to raise their selling prices.

Construction companies reported positive expectations for the first time since September 2019 on the back of a seasonal rebound in activity and rising investment demand for housing construction – the sector’s index finally moved above its equilibrium level in April, to 51.5, up from 40.6 in March. Respondents expected an increase in construction volumes, the number of new orders, purchases of contractor services, and purchases of raw materials and supplies.

Companies across all sectors expect a rise in their selling prices on the back of higher raw material and supplies prices. They also report no intentions to expand their workforces.

Background information

This survey was carried out from 5 April through 23 April 2021. A total of 297 companies were polled. Of the companies polled, 41.8% are industrial companies, 30.3% companies in the services sector, 23.9% trading companies, and 4.0% construction companies. 37.0% of the respondents are large companies, 30.0% medium companies, and 33.0% small companies.

Of the companies surveyed, 39.4% are both exporters and importers, 10.8% are exporters only, 13.5% are importers only, and 36.4% 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 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 development 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 April 2021 survey in the Monthly Surveys of Companies Subsection of the Publications Section.

The results of the next survey (for May) will be published on the first business day of June 2021.


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