According to the latest survey conducted by GKI Economic Research Co. with the support of the European Union, both consumer and business sentiment weakened slightly in May compared to April. Companies in particular exhibited a marginal decline in employment intentions, while aggregate expectations for future sales prices dropped to a seven-month low — signalling a continued downward trend in inflationary pressures. Meanwhile, perceptions regarding the predictability of the business environment remained unchanged.
Business expectations hit their lowest point in January this year, followed by a modest recovery through April. However, this positive trend came to a halt in May, with GKI’s Business Confidence Index falling by more than 2 points compared to the previous survey—returning to levels last seen at the start of the year. Confidence indexes declined by 2 to 3 points across all four sectors surveyed. Among them, the construction industry remained the least optimistic, while the business services sector continued to exhibit the highest level of confidence.
In May, GKI’s employment indicator—which reflects companies’ overall expectations for staffing levels—declined slightly compared to the previous month. While no significant changes were observed in the industrial and retail sectors, sentiment from construction and business services showed a modest deterioration. Over the next three months, 9% of firms plan to expand their workforce, while 12% anticipate downsizing.
Perceptions of the predictability of the business environment remained broadly unchanged in May, with the construction sector reporting the most negative assessments.
May marked the fifth consecutive month of decline in the price expectations indicator, a composite measure summarizing the business sector’s pricing intentions. This brought the indicator down to a seven-month low. Price hike intentions fell across all four surveyed sectors, with the most substantial decline observed in business services. Looking ahead, 20% of firms intend to raise prices, while 8% expect to lower them—compared to 26% and 8%, respectively, a month earlier.
The GKI Consumer Confidence Index started the year at a relatively low level, saw a slight improvement in April, but then reversed course in May, effectively returning to the levels recorded between January and March. Households reported a modest improvement in their financial situation over the past 12 months but were somewhat more pessimistic about the coming year. In contrast, expectations for the national economic outlook over the next 12 months improved slightly compared to April. However, perceptions regarding the ability to spend on major consumer goods declined. Inflation expectations eased further, and fears of rising unemployment also moderated somewhat.
The underlying data and charts are provided in the attached Excel file.
Methodological Note:
GKI Economic Research Co. calculates its Economic Sentiment Index in line with the methodology of the European Commission. The index reflects both business and consumer expectations, combining the Business Confidence Index and the Consumer Confidence Index as a weighted average.
The Business Confidence Index is the weighted average of sentiment indicators from the industrial, retail, construction, and business services sectors.
The Employment Indicator represents the difference between the proportion of companies planning to increase vs. decrease staffing levels over the next three months.
The Price Expectations Indicator is the difference between the proportion of companies planning to raise vs. lower their selling prices in the next quarter.
The Consumer Confidence Index is the arithmetic average of balance indicators derived from household responses to questions regarding their past 12-month financial situation, financial expectations for the next 12 months, the expected economic situation of the country, and prospects for purchasing durable goods.
GKI reports seasonally adjusted data, filtering out fluctuations caused by seasonal factors—such as increased demand before Christmas or reduced production during the summer holiday period—using standard statistical techniques.
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