Only retail sector felt positive in March

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Data from the business tendency surveys carried out by the Central Statistical Bureau (CSB) show that in March 2022 business confidence indicators have reduced in the construction, manufacturing and services sectors. Only in the retail trade did sentiment remain positive.

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 sectors. If the indicator is above zero, business environment is positive, if it is below zero, business environment is negative.

In March 2022 the confidence indicator in retail trade, according to seasonally adjusted data, has grown to 4.4. As compared to February, this indicator has improved very slightly – by 0.1 percentage point. As compared to the previous month, business environment in retail trade of food products has improved, but with the arrival of spring and significant rise in prices, especially optimistic in March were retail sellers of fuel.

In this sector confidence indicator has grown by 22.3 percentage points and reached 9.1. In turn, business environment in trade of non-food products as well as of motor vehicles, compared to February, has worsened. However, the lowest confidence indicator in March was in maintenance and repair of motor vehicles (- 9.5). As compared to February, it has dropped by 16 percentage points.

In March, 19 % of retail sellers indicated that they feel no factors restricting their economic activity, and this is the highest value of this indicator since October last year. As compared to February, the share of retail sellers having mentioned insufficient demand and lack of labour force as a factor restricting their economic activity has dropped. In March they comprised 29 % and 16 %, respectively. In turn, share of retail sellers experiencing financial difficulties has increased significantly (14 %).

As usual, retail sellers are also restricted by competition in their trade sector (37 %). Impact of COVID-19 as a significant factor restricting economic activity was mentioned only by 16 % of respondents, however, there are as many respondents considering that their activity is directly or indirectly affected by war in Ukraine and related sanctions. 4 % of respondents mentioned price rise as a restrictive factor, which is also partially related to the war.

Significant worsening in several services sectors

In services sector in March 2022, according to seasonally adjusted data, confidence indicator was negative (- 2.1). Business environment, as compared to February, has fallen by 8.5 percentage points. As usual, indicators of environment differ significantly in various services sectors, and also trend of their changes differ depending on the specificities of the sector, seasonal impact and to what extent Covid-19 restrictions and war in Ukraine affects the sector. In several sectors, where business environment indicators in February were positive, they reduced significantly in March: insurance – by 35.5, air transport – by 35, travel agency and tour operator booking services – by 34.8, computer programming – by 16.7 percentage points. However, there also are services sectors, where business environment continues to improve. For example, in accommodation confidence indicator has improved by 16.7 percentage points and for the first time since September last year has reached a positive value (4.3). When analysing components of confidence indicator in services sector, it is obvious that rapid worsening of environment is mostly affected by the opinion of entrepreneurs that a decline in demand for their services is expected in the next 3 months. In March environment in general was positive in 12, but negative – in 18 services sub-sectors.

In March, 32 % of respondents of services sector have not felt any factor restricting economic activity. Compared to February, their share has decreased by 3 percentage points. Activity of 27 % of entrepreneurs of services sectors is significantly restricted by insufficient demand, but of 15 % – by lack of labour force. The share of respondents indicating that consequences caused by Covid-19 is a significant factor restricting successful economic activity has dropped to 10 %, in turn, 13 % indicated that their activity is directly or indirectly affected by war in Ukraine and related sanctions. 4 % of respondents indicate price rise, which increases costs of enterprises.

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Business environment in construction is worsening significantly

In March confidence indicator in construction, according to seasonally adjusted data, is -15.5 which, compared to the previous month, has reduced by 12.2 percentage points. In March, compared to February, assessment of entrepreneurs regarding level of construction orders worsened, as well as assessment regarding expected development of employment in the next three months was less optimistic. Confidence indicator reduced in construction of buildings, but increased in civil engineering and specialized construction activities.

In March construction sector was mostly affected by bad weather (indicated by 33 % of respondents, which is 15 percentage points less than in March last year). The second most often factor restricting activity of enterprises indicated still is insufficient demand (indicated by 31 % of entrepreneurs surveyed), which, as compared to the previous month, rose by 2 percentage points. Share of enterprises, whose economic activity is restricted by lack of materials or equipment, has grown 2.1 time (26 % of respondents). Impact of financial difficulties has increased by 3 percentage points (16 % of entrepreneurs), while impact of lack of labour force has reduced by 9 percentage points (18 % of enterprises). Negative impact of Covid-19 in March was mentioned by 5 % of enterprises, which is 4 percentage points less than in February. Rise in prices of building materials, services, fuel and energy resources (8 % of respondents), as well as war in Ukraine and geopolitical situation in the world (4 % of entrepreneurs surveyed) were also mentioned as other factors restricting production. In March, economic activity of 15 % of construction enterprises surveyed was not affected by any restrictive factor (increase of 2 percentage points, as compared to March last year).

Confidence indicator in manufacturing is negative

In March, compared to February, confidence indicator in manufacturing has worsened by 3.2 percentage points and comprises -1.3. It was affected by less optimistic forecasts of enterprise managers regarding their production activity for the next three months, as well as more negative assessment regarding level of current orders. The largest drop of confidence indicator, compared to the previous month, is in such manufacturing sectors as manufacture of basic pharmaceutical products and pharmaceutical preparations, manufacture of electrical equipment, repair and installation of machinery and equipment, printing and reproduction of recorded media, manufacture of wearing apparel, manufacture of furniture and manufacture of machinery and equipment n.e.c. In turn, there was an increase in manufacture of computer, electronic and optical products, manufacture of rubber and plastic products, manufacture of textiles, as well as manufacture of motor vehicles, trailers and semi-trailers.

As compared to February, there was a drop in the number of respondents, which indicated insufficient demand and lack of labour force as a factor restricting economic activity (indicated by 26 % and 22 % of enterprises surveyed, respectively). In turn, impact of lack of materials or equipment and financial difficulties has increased (indicated by 24 % and 13 % of respondents, respectively). In March, 5 % of enterprises surveyed indicated impact of Covid-19 (compared to the previous month, reduction of 4 percentage points). As other factors restricting production also war in Ukraine, political situation in the world and impact of sanctions (7 % of respondents), rise in production costs – prices of raw materials and resources – (5 % of enterprises) were mentioned. In March, economic activity of 28 % of manufacturing enterprises surveyed was not affected by any restrictive factor (remained at the level of the previous month).



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