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Business sentiment improves noticeably, almost reaching neutral level – results of February BOS

Business sentiment improves noticeably, almost reaching neutral level – results of February BOS

Businesses upgraded their expectations for their February performance and future prospects on the back of an easing in quarantine restrictions. This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis. The index was 48.8 in February 2021, up from 37.6 in January. This is the highest figure since October 2020. In spite of that, companies’ expectations have been below the equilibrium value of 50 points for 12 months in a row.

Companies across all of the surveyed sectors improved expectations for their February business performance.

Industrial companies’ expectations improved the most – these companies reported positive expectations of their business performance for the first time in the last four months – in February the sector’s index moved up to 50.3, from 38.6 in January. Respondents from industrial companies upgraded their expectations for the amount of manufactured goods and the number of new orders, including export orders.

Trading and services companies also noticeably improved their expectations for their business performance after the lifting of the January lockdown – each of the sectors’ indices moved up to 49.0, from 33.3 and 39.7 respectively in January. More robust expectations for the number of new orders and the amount of goods for sale and services show that these sectors are resuming operations.

The expectations of (housing) construction companies remained gloomier than those of companies in all other sectors. The sector’s DI improved only slightly in February – to 35.3, following a fall to 33.1 in January. Amid the seasonal decline in economic activity, construction companies expect a drop in construction volumes and the number of new orders, while reporting firmer expectations for a rise in contractor and raw material and supplies prices.

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 3 February through 19 February 2021. A total of 194 companies were polled. Of the companies polled, 38.7% are industrial companies, 31.4% companies in the services sector, 25.3% trading companies, and 4.6% construction companies. 35.1% of the respondents are large companies, 28.4% medium companies, and 36.6% small companies. 

Of the companies surveyed , 38.7% are both exporters and importers, 9.3% are exporters only, 18.6% are importers only, and 33.5% 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 2021 February survey in the Monthly Surveys of Companies Subsection of the Publications Section.

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


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