By KYIV. Jan 2 (Interfax-Ukraine) – The Business Activity Expectations Index calculated by the National Bank of Ukraine (NBU) fell to 42.1 in December from 42.7 in November and remained below the neutral level, according to a survey of enterprises released by the NBU on Monday.
"In December 2022, the index was 42.1, down from 42.7 in November. More pronounced negative consequences of hostilities, the risk of further terrorist attacks on critical infrastructure and the large amount of time needed to repair it, declining production, and falling real household income made it more difficult to conduct economic activity, while also worsening the expectations of all of the surveyed sectors," the NBU said.
"Industrial companies reported a more negative economic outlook on the back of power cuts, the sector’s index being 43.4 in December, compared to 44.1 in November. Respondents reported dimmer expectations for the amount of manufactured goods and the amount of unfinished production. At the same time, expectations were less downbeat about the number of new orders for products, including export orders. Respondents somewhat softened their expectations of a rise in raw material and supply prices, while also reporting less strong intentions to raise their selling prices," it said.
"Trading companies reported a more negative outlook for their economic activity amid blackouts and weaker consumer demand due to declining household income, the sector’s index being 42.1 in December, down from 45.2 in November. Respondents downgraded their expectations of their trade turnover and the amount of goods purchased for sale. With firm expectations of a rise in supplier prices and in the cost of goods purchased for sale, trading companies continued to report intentions to cut their trade margins," the report says.
"Construction companies reported the most guarded views about their economic performance amid weak demand for housing, rising production costs, frequent blackouts, and seasonal factors: in December the sector’s index dropped to 35.6, down from 41 in November. Respondents had significantly dimmer expectations for the number of new orders, while also expecting a sizeable decrease in purchases of raw materials and supplies. Companies downgraded their expectations of the amount of construction work done," it reports.
"Although softening their negative expectations somewhat, services companies continued to report a gloomy economic outlook because of the impossibility of fully reestablishing logistical chains and due to depressed demand, the sector’s index being 41.8 in December, up from 40 in November. Respondents reported less pessimistic expectations of a decrease in the amount of services provided, the number of new orders, and the amount of services that are being provided," the central bank said.
"This survey was carried out from December 5 through December 22, 2022. A total of 433 companies were polled. Of the companies polled, 46% are industrial companies, 27.7% companies in the services sector, 21.9% trading companies, and 4.4% construction companies; 30.7% of the respondents are large companies, 31.6% medium companies, and 37.6% small companies," the document reads.
