Ukrainian business expectations worsen in Nov 2024 – NBU
The Business Activity Expectations Index (BAEI), calculated by the National Bank of Ukraine (NBU) using a scale from zero to 100, dropped by 2.3 points to 47.2 points in November 2024 after adding 0.7 points in October, and is also below 47.5 points recorded in February 2024, Ukrainian media said, citing the NBU website.
“The increased intensity of the crisis, renewed power outages […], further growth in energy, labor and logistics costs, accelerating inflation, a significant shortage of skilled workers and seasonal factors restrained economic activity and weakened business expectations,” the NBU said, listing the negative aspects that affected November’s BAEI.
Trading companies gave the most optimistic estimates even though their sectoral index fell 0.5 points to 51.4 points in November. It was the only sector among those surveyed to provide a positive economic outlook, citing domestic demand and the sufficient supply of goods, the NBU said.
“Respondents expected an increase in trade turnover and the amount of goods purchased for sale, while also reporting positive expectations about their stocks of goods for sale. Respondents continued to declare intentions to cut their trade margins,” the NBU said when commenting on the findings of the study.
They are followed by industrial enterprises, whose sectoral index dropped by 3.1 points to 46.7 points in November because of a worsening security situation, disruptions to the power supply and rising production costs.
“In contrast to the previous month, respondents expected a decrease in the amount of manufactured goods and in the number of new orders for products. Companies also weakened their expectations about the number of new export orders and the amount of unfinished products,” it said.
At the same time, businesses slightly improved their estimates of finished goods and raw material stocks.
Companies in the services sector also downgraded their performance expectations, citing rising logistics costs, power cuts and a shortage of skilled workers. Their index lost 2.4 points standing at 44.8 points in November 2024.
“Companies reported dimmer expectations for the amount of services provided and the number of new orders for services. Expectations about the amount of services that are being provided remained weak,” the NBU said.
The most pessimistic estimates were given by construction companies, whose sectoral index dropped by 6 points to 43.6 points in November due to a seasonal decline in the construction of roads and infrastructure and a shortage of skilled workers.
“Respondents expected a drop in construction volumes, the number of new orders, and in purchases of raw materials and supplies. At the same time, despite downgrading their expectations significantly, respondents remained upbeat about purchases of contractor services amid stronger negative expectations about contractors’ availability and the slower growth of contractor service costs ,” the NBU said.
Due to a weaker growth of purchase prices, industrial, construction and services companies anticipated a slower growth pace for prices for their own products and services. Only trading companies announced plans to raise their selling prices slightly.
“The labor market situation remained challenging. Respondents across all of the surveyed sectors declared intentions to reduce their workforces, with the strongest intentions reported by services companies,” the NBU said.
The survey was carried out on November 4-21 and involved 504 enterprises, with industrial companies accounting for 44.2% of them, services companies for 27.6%, trading companies for 23.4%, and construction companies for 4.8%. A total of 29.6% of all respondents were large enterprises, 28.8% medium-sized enterprises, and 41.7% small ones.
Meanwhile, 31.7% of the surveyed companies are both exporters and importers, 10.1% conduct only export operations, 18.3% conduct only import operations, and 39.9% of those polled are neither exporters nor importers.
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