By KYIV. Nov 3 (Interfax-Ukraine) – The business activity expectations index (BAEI), calculated by the National Bank of Ukraine (NBU) on a scale from zero to 100, decreased by 0.5 points in October to 49.6 points, its neutral level of 50 points, the central bank said on Wednesday.
“Persisting considerable security risks, the destroyed production facilities of some companies, logistical hurdles faced by exporters, narrowing investment demand, rebounding fuel price growth, and substantial shortages of qualified staff constrained economic activity and worsened expectations,” the regulator said, listing the negative factors.
At the same time, in September, assessments of the economic situation noticeably worsened in trade and construction – from 53.3 to 50 points and from 50.6 to 44.8 points, respectively, and also not so significantly in the services sector – from 47.9 to 47.2 points.
Traditionally, trading companies have remained the most optimistic among other sectors and for the eighth month running have reported a positive economic outlook thanks to sustained domestic demand, the stable functioning of the energy system, and a sufficient supply of goods, although the sector’s index being 53.0 in October, down from 53.3 in September.
Traders continued to declare intentions to step up their goods turnover and to purchase more goods for sale, while also improving their views about their stocks of goods for sale..
“With stronger expectations of a rise in purchase prices, trading companies expected faster growth in the prices of goods purchased for sale and declared intentions to cut their trade margins further,” the regulator said.
Industrial companies have expected no changes in their economic performance for two months in a row, in spite of optimized production/logistical chains and decelerating inflation: the sector’s index was 50.0 in October, unchanged on the previous month.
Companies remained upbeat about the amount of manufactured goods, the number of new orders for products, and about stocks of raw materials and supplies. In contrast, they expected a drop in the number of new export orders for products.
Meanwhile, respondents reported less pessimistic views about the amount of unfinished products, but remained downbeat about their finished goods stocks.
“After reporting a positive economic outlook for five months in a row, in October, construction companies expected weaker economic performance on the back of a seasonal decline in economic activity, narrowing investment demand, and shortages of qualified staff,” the National Bank said.
According to the survey, for the first time since May of the current year, respondents expected a decrease in construction volumes, the number of new orders and in purchases of raw materials and supplies. They also softened their positive expectations about an increase in purchases of contractor services and the cost of contractor services.
Construction companies expected a significant decrease in both selling and purchase price growth, while also being more pessimistic about the availability of contractors.
In October, services companies continued to report a pessimistic economic outlook because of ongoing rises in fuel prices, logistical hurdles and weak demand.
“Respondents remained downbeat about the number of new orders and the amount of services that are being provided. In contrast to the previous month, service providers also expected a drop in the amount of services provided,” the regulator said.
In general, with rising raw material and supplies prices, most respondents declared intentions to raise their selling prices.
Staff expectations have worsened. Respondents across all sectors reported intentions to reduce their workforces: industry – 46.5 points, construction – 43.8 points, trade – 49.1 points and services – 47.9 points.
The NBU said that this survey was carried out from 5 October through 24 October 2023. A total of 505 companies were polled. Of the companies polled, 45.3% are industrial companies, 28.5% services companies, 21.4% trading companies, and 4.8% construction companies; 32.3% of the respondents are large companies, 29.5% medium companies, and 38.2% small companies.
At the same time, out of the surveyed companies, 32.1% are both exporters and importers, 9.1% are exporters only, 16.8% are importers only, and 42.0% are neither exporters nor importers.
