The relocation of enterprises returns optimism to the industry - the index of expectations of the NBU

14:36 01 September Kyiv, Ukraine

The index of business activity expectations of the NBU in August rose to 44.1 points.

This is stated in the monthly business survey by the National Bank.

Uncertainty about the duration of the war and the resulting deterioration in inflationary expectations, further destruction of production facilities and infrastructure, significant forced migration of the population within the country are holding back the resumption of economic activity of enterprises in all sectors of the economy, the report says.

Industrial enterprises improved their estimates of economic prospects, taking into account the relocation of some enterprises to safer regions, the gradual establishment of supply chains and adaptation to new conditions. The sectoral index in August was 46.7 compared to 43.1 in July. For the first time in recent months, enterprises expected an increase in production volumes and were less pessimistic about the volume of new orders for products, including export ones.

Construction sector enterprises also strengthened their performance assessments in August due to favorable seasonal conditions and the restoration of the construction of residential and non-residential buildings.. The sectoral index was 41.2 (in July - 35). Pessimism decreased in expectations of construction volumes and volumes of new orders, as well as volumes of purchases of raw materials and materials.

Trade enterprises in August slightly worsened their expectations of their economic activity, however, they are still closer to the neutral level. The sectoral index was 47.4 compared to 48.7 in July. Respondents expect a decrease in turnover volumes, remain restrained regarding the volume of purchases of goods for sale, indicate a decrease in the balance of goods for sale and restrictions on the supply of new goods. Retailers are further set to reduce trading margins.

Service industries were the most conservative among other sectors of the economy, given further damage to transport infrastructure, weak demand and lost orders. The sectoral index worsened to 39.6 from 41.9 in July. Respondents expect a decrease in the volume of services provided, the volume of new orders and services in the process of implementation, weakened expectations of an increase in tariffs for their own services.

Enterprises of all sectors participating in the surveys maintain high expectations for the rise in prices for their products/services against the backdrop of increased expectations of rising prices for raw materials and suppliers' goods.

Employment estimates remain subdued. Companies in all sectors do not expect an increase in the total number of employees. At the same time, industrial and construction enterprises noted a slight increase in demand for personnel.

The NBU conducted a monthly survey of 429 enterprises from August 4 to 23, 2022. The National Bank monthly calculates the index of business activity expectations, except for the forced break in March-May of this year.