A survey conducted by GKI Economic Research – with the support of the European Union – found that both consumers and businesses were more optimistic in September than in August. The GKI economic sentiment index, a summary measure of expectations, rose by just over two points, reaching an eleven-month high. Firms’ hiring intentions and expectations for selling prices remained unchanged from the previous month, while the predictability of the business environment slipped slightly.
Source: GKI Survey
The GKI business confidence index rose by two points in September, following a similar increase in August, reaching an eleven-month high. The industrial confidence index climbed by two points and the services index by three, while retail and construction indicators remained unchanged. The industrial index is now at its highest level in fifteen months. Looking ahead, construction remains the most pessimistic sector, while business services are the most upbeat.
Source: GKI Survey
The overall employment indicator, which reflects firms’ staffing expectations, remained largely unchanged from the previous survey. Over the next three months, 7% of businesses plan to expand their workforce, while 13% intend to cut it. Industry and business services are the most optimistic sectors, whereas construction remains the least upbeat.
The predictability of the business environment slipped slightly in September, with industrial and construction firms most affected by the uncertainty.
The price indicator, which gauges firms’ expectations for selling prices over the next three months, remained unchanged from August. In the coming quarter, 19% of companies plan to raise prices, while 9% expect to cut them.
The GKI consumer confidence index rose by two points in September, reaching a twelve-month high. Although households felt their financial situation over the past year had worsened and their outlook for the next 12 months remained unchanged, they were considerably more optimistic about the country’s economic prospects over the same period. Perceptions of disposable income for major purchases also improved. Inflation expectations and fears of unemployment eased compared with August.
Data for the charts can be found in the attached Excel file.
Methodological Explanation:
GKI Economic Research Co., following the methodology prescribed by the European Commission, calculates its economic sentiment index by integrating expectations from both the business sector and households (consumers). Specifically, the GKI economic sentiment index is a weighted average of the consumer confidence index and the business confidence index.
The GKI business confidence index itself is a weighted average of confidence indicators from four sectors: industry, retail trade, construction, and services. The employment indicator reflects the net balance of firms planning to increase or decrease their workforce over the next three months. Similarly, the price indicator measures the net difference between companies intending to raise or lower their selling prices within the same period.
The GKI consumer confidence index is computed as the arithmetic mean of balance indicators derived from survey responses regarding households’ assessments of their financial situation over the past twelve months, their financial outlook for the next twelve months, expectations for the country’s economic performance, and intentions to purchase durable goods.
GKI publishes seasonally adjusted data, employing appropriate mathematical techniques to eliminate distortions caused by seasonal factors – such as heightened demand before Christmas or reduced production during summer holidays.
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