Business confidence indicators characterize the general situation of the sector and are acquired by carrying out business tendency surveys in the sectors of industry, construction, retail trade and services. If the indicator is above zero, the business environment is positive, if it is below zero, the business environment is negative.
In March 2022, the retail confidence indicator, according to seasonally adjusted data, rose to 4.4. Compared to February, this indicator improved very slightly – by 0.1 percentage point. Compared to the previous month, the business environment in the food retail trade has improved, but with the arrival of spring and the significant increase in prices, fuel retailers were particularly optimistic in March .
In this sector, the confidence indicator rose by 22.3 percentage points to 9.1. In turn, the business environment in the trade of non-food products as well as motor vehicles, compared to February, has deteriorated. However, the lowest confidence indicator in March was for maintenance and repair of motor vehicles (-9.5). Compared to February, it fell by 16 percentage points.
In March, 19% of retailers said they felt no factors limiting their economic activity, and this is the highest reading for this indicator since October last year. Compared to February, the share of retailers citing insufficient demand and lack of labor as factors limiting their economic activity has decreased. In March, they were 29% and 16% respectively. In turn, the share of retailers experiencing financial difficulties has increased significantly (14%).
As usual, retailers are also constrained by competition in their area of trade (37%). The impact of COVID-19 as an important factor limiting economic activity was only mentioned by 16% of respondents, however, there are as many respondents who consider their activity to be directly or indirectly affected by the war in Ukraine and related sanctions. 4% of respondents mention rising prices as a limiting factor, which is also partly related to the war.
Sharp deterioration in several service sectors
In the services sector in March 2022, according to seasonally adjusted data, the confidence indicator was negative (-2.1). The business environment, compared to February, fell by 8.5 percentage points. As usual, environmental indicators differ significantly across various service industries, and the pattern of their changes also differs depending on industry specifics, seasonal impact, and the extent to which Covid-19 restrictions 19 and the war in Ukraine affect the sector. In several sectors, where the business environment indicators in February were positive, they fell sharply in March: insurance – by 35.5, air transport – by 35, travel agency and tour operator reservation services – by 34.8, computer programming – by 16.7 percentage points. However, there are also service sectors, where the business environment continues to improve. For example, the housing confidence indicator improved by 16.7 percentage points and, for the first time since September last year, reached a positive value (4.3). When analyzing the components of the confidence indicator in the services sector, it is evident that the rapid deterioration of the environment is mainly affected by the opinion of entrepreneurs that a drop in demand for their services is expected over the next 3 months. In March, the overall environment was positive in 12, but negative – in 18 services sub-sectors.
In March, 32% of respondents in the service sector felt that there were no factors limiting economic activity. Compared to February, their share fell by 3 percentage points. The activity of 27% of entrepreneurs in the service sectors is considerably limited by insufficient demand, but of 15% by the lack of manpower. The share of respondents indicating that the consequences caused by Covid-19 are an important factor limiting the success of economic activity fell to 10%, in turn, 13% indicated that their activity is directly or indirectly affected by the war in Ukraine and related sanctions. 4% of respondents indicate rising prices, which increases business costs.
The business environment in construction is deteriorating considerably
In March, the construction confidence indicator, according to seasonally adjusted data, is -15.5, which, compared to the previous month, decreased by 12.2 percentage points. In March, compared to February, the assessment of contractors regarding the level of construction orders deteriorated, as well as the assessment regarding the expected development of employment over the next three months was less optimistic. Confidence indicator down in building construction, but up in civil engineering and specialized construction activities.
In March, the construction sector was mainly affected by bad weather (indicated by 33% of respondents, 15 percentage points less than in March last year). The second most often cited factor limiting business activity is insufficient demand (cited by 31% of entrepreneurs surveyed), which, compared to the previous month, increased by 2 percentage points. The share of companies whose economic activity is limited by the lack of materials or equipment increased by 2.1 times (26% of respondents). The impact of financial difficulties increased by 3 percentage points (16% of entrepreneurs), while the impact of lack of labor decreased by 9 percentage points (18% of companies). The negative impact of Covid-19 in March was mentioned by 5% of companies, 4 percentage points less than in February. Rising prices for building materials, services, fuels and energy resources (8% of respondents), as well as the war in Ukraine and the geopolitical situation around the world (4% of entrepreneurs surveyed) were also mentioned as other factors limiting production. In March, the economic activity of 15% of surveyed construction companies was not affected by any constraining factors (up 2 percentage points compared to March last year).
The confidence indicator in the manufacturing sector is negative
In March, compared to February, the manufacturing confidence indicator deteriorated by 3.2 percentage points and includes -1.3. It was affected by less optimistic forecasts from business leaders regarding their production activity for the next three months, as well as a more negative assessment of the level of orders in progress. The largest drop in the confidence indicator, compared to the previous month, concerns manufacturing sectors such as the manufacture of basic pharmaceutical products and pharmaceutical preparations, the manufacture of electrical equipment, the repair and installation of machinery and equipment, printing and reproduction of recorded media, manufacture of clothing, manufacture of furniture and manufacture of machinery and equipment nec At the same time, manufacture of computer, electronic and optical products, manufacture of rubber products and plastic, the manufacture of textiles, as well as the manufacture of motor vehicles, trailers increased. and semi-trailers.
Compared to February, there was a drop in the number of respondents, indicating insufficient demand and the lack of labor as a factor limiting economic activity (indicated by 26% and 22% of the companies surveyed, respectively). In turn, the impact of lack of materials or equipment and financial difficulties increased (indicated by 24% and 13% of respondents, respectively). In March, 5% of companies surveyed indicated the impact of Covid-19 (compared to the previous month, reduction of 4 percentage points). As other factors limiting production, the war in Ukraine, the political situation in the world and the impact of sanctions (7% of respondents), the increase in production costs – the prices of raw materials and resources – (5% companies) were mentioned. In March, the economic activity of 28% of the manufacturing companies surveyed was not affected by any constraining factor (remaining at the level of the previous month).