According to the empirical survey conducted by GKI Economic Research Co. with the support of the EU, both the business sector and consumers became slightly more pessimistic in November. GKI’s economic sentiment index declined by small steps in the July-October period, and with a 3-point decline in November, it fell to its 13-month low. The employment plans of companies remained largely unchanged, while the predictability of the business environment deteriorated significantly compared to the previous month. The intentions of the business sector to raise prices and the inflationary expectations of households also increased markedly.

GKI’s business confidence index fell by more than 2 points in November compared to October. The outlook deteriorated in all four sectors surveyed. The industrial confidence index fell by 3 points on a month-on-month basis and the construction index by 2 points, while the index for traders and business services fell within the statistical margin of error. Trade remained the most pessimistic sector, but construction was not far behind. The services sector was the least gloomy.

The overall propensity to hire of businesses in the third month of autumn did not significantly change compared to October, with construction being the only sector where this propensity increased somewhat. The predictability of the business environment deteriorated sharply, with this indicator falling to its 24-month low. Overall price increase plans in the business sector increased noticeably compared to the previous month, rising to an 11-month high. The increase in price increases was strongest in trade.

November was the third consecutive month in which GKI’s consumer confidence index decreased compared to the previous month, this time by almost 4 points. This brought the index to its 12-month low. Households’ satisfaction with their financial situation over the past 12 months declined significantly, and their expectations for the next 12 months also deteriorated somewhat compared to October. Perceptions of Hungary’s economic situation over the next 12 months and of the amount of own money to spend on high-value consumer goods deteriorated only within the statistical margin of error. Households’ inflationary expectations rose significantly, whereas unemployment expectations remained unchanged.

Explanation to the methodology:

In line with the methodology used by the European Commission, GKI surveys the expectations of industry, trade, construction, service sector and households (consumers) in the calculation of its business confidence index. GKI’s economic sentiment index is the weighted average of the consumer confidence index and the business confidence index.

The business confidence index is the weighted average of the industrial, trade, construction, and services confidence indices. The industrial confidence index is derived from the responses to questions on business perceptions of incoming orders and inventories, and on production expectations. The construction confidence index is the average of the perception of incoming orders and employment expectations. The trade confidence index is the average of business and inventory level perceptions and turnover expectations. The services confidence index is the average of business confidence, turnover and employment expectations.

The consumer confidence index is the arithmetic average of balance indicators calculated from responses to questions on households’ perceptions of their financial situation in the past 12 months, their financial prospects for the next 12 months, the expected development of Hungary’s economic situation and their prospects for buying consumer durables.

GKI publishes seasonally adjusted data by using appropriate mathematical method to filter out the discrepancies caused by seasonal effects (e.g., differences in weather conditions between winter and summer, increased demand before Christmas, lower output because of summer vacations).