In December business environment becomes worse
Data of business tendency surveys1 carried out by the Central Statistical Bureau (CSB) show that in December 2020 business confidence indicators dropped slightly in construction and industry, but in retail trade and services sector there was a significant drop.
Business confidence indicators characterize general situation in the sector, and they are acquired by carrying out business surveys in industry, construction, retail trade and services sector. If the indicator is above zero, business environment is positive, if it is below zero – business environment is negative.
Assessment of entrepreneurs in retail trade is below zero for the second month
According to seasonally adjusted data, in December confidence indicator in retail trade comprised -11.7. As compared to November, this indicator has dropped by 5.6 percentage points. Already for the second month confidence indicators are negative and continue to reduce both in all sub-sectors of retail trade, and in trade and repair of motor vehicles and motorcycles, their parts and accessories. The lowest indicators are in retail sale of automotive fuel and of non-food products. In retail sale of automotive fuel confidence indicator (-41.4) has even dropped below the lowest value (-39.5) experienced during the crisis in 2008–2009. It must be taken into account that part of enterprises had provided their answers already at the beginning of the month, when current strict retail trade restrictions were not valid yet.
In December, as compared to October*, the number of retail trade enterprises indicating that their economic activity is restricted by impact of COVID-19 has doubled. This factor was marked by 48 % of respondents. The second important restrictive factor is competition in trade sector (33 %), but it is followed by insufficient demand (26 %). In December share of enterprises in retail trade sector feeling no factors restricting economic activity has dropped significantly. Their share comprised 19 %.
Confidence indicator in services sector -20
In services sector in December 2020, according to seasonally adjusted data, confidence comprised -20.0. As compared to November, this indicator has dropped by 3.4 percentage points. Very low confidence indicators, that continue to reduce, are in catering (-83.7 %), accommodation (-82.8 %), as well as in travel agency and tour operator sector (-84.7 %). Positive confidence indicators in December remained in computer programming (0.3 %) and in information services (5.4 %). On the background of other services sectors especially optimistic are providers of postal and courier activities (29.6 %). In this sector confidence has reached the highest value of 2020, which is affected both by seasonality characteristic to December and by rise in demand related to COVID-19.
In December, 35 % of respondents of services sector have not felt any factor restricting economic activity, but 42 % of respondents indicated that consequences from COVID-19 is a significant factor restricting successful economic activity, which is the highest indicator since May of this year. As significant restrictive factor in services sector was also insufficient demand that was marked by 26 % of entrepreneurs surveyed, however, in December this indicator has reached the lowest value of 2020.
Confidence indicator in construction is the lowest among all sectors – -22.5
In December 2020, confidence indicator in construction, compared to the previous month, has fallen by 2.3 percentage points, reducing to -22,5, which was affected by a more pessimistic assessment of entrepreneurs regarding level of construction orders. Confidence indicator decreased in civil engineering and specialized construction activities, but increased in construction of buildings.
Compared to November, in December the number of respondents indicating insufficient demand (33 % of construction enterprises surveyed) and impact of weather (26 % of enterprises surveyed) out of all factors affecting economic activity of construction enterprises has increased. Impact of COVID-19 in December was indicated by 13 % of respondents, reaching value of June 2020. However, the number of enterprises indicating lack of labour force (9 % of construction enterprises surveyed) as a restrictive factor has slightly reduced. More by 3 percentage points than a year ago construction enterprises felt insufficient demand and financial difficulties, but less – lack of labour force and impact of weather (8 percentage points and 1 percentage point, respectively). Economic activity of 26 % of construction enterprises surveyed was not affected by any restrictive factors in December, which is the lowest value of this indicator since May 2020.
Confidence indicator in manufacturing is rather stable
In December confidence indicator in manufacturing comprised -6.2 (0.4 percentage point less than in November), which was affected by even more negative forecasts of company managers regarding their own enterprise's activity for the next three months (expected fall in the production activity, fall in assessment of economic activity). The largest drop of confidence indicator, as compared to November, was in such manufacturing sectors as manufacture of electrical equipment, manufacture of paper and paper products, manufacture of wearing apparel, manufacture of beverages, manufacture of textiles and manufacture of chemicals and chemical products. As compared to the previous two months, business environment worsened regarding expected sale price of goods and development of employment in the following three months.
As compared to October, the number of enterprises indicating lack of materials or equipment (12 %) out of all factors affecting manufacture in enterprise has slightly increased, but the number of enterprises indicating insufficient demand (31 % of respondents) as a factor restricting manufacture has fallen by 4 percentage points. Increasingly more respondents (16 %) indicated impact of COVID-19 in December, and this indicator is similar to May and June 2020. In December, economic activity of 37 % of enterprises of industry sector was not affected by any restrictive factor.
In December 2020 economic sentiment indicator comprised 88.13, which is 2.3 points less than in November. Economic sentiment indicator characterizes general socio-economic situation in the country during a certain period of time (month), and it is calculated by the European Commission, Directorate-General for Economic and Financial Affairs for all EU countries according to a common methodology, taking 15 various seasonally adjusted components included in industry, construction, retail trade and services sector, as well as in consumer confidence indicator, as a basis.
 Business surveys in industry, construction, retail trade and services sector are carried out by the CSB monthly, accordingly methodology of the Joint Harmonised EU Programme of Business and Consumer Surveys co-financed by the European Commission.
2 Net (balance) is calculated as difference between positive and negative answers of entrepreneurs surveyed, which are expressed in per cent.
3 Value of the indicator exceeding 100 means that numeric characteristic of the economic situation exceeds long-term average value (2000 – 2019). While value of the indicator smaller than 100 means that characteristic of economic situation is below long-term average value.
* Data on factors restricting economic activity is not collected every month.