Business Activity Expectations Index Almost Reaches Its Neutral Level – Business Outlook Survey in October

In October, businesses continued to upgrade their performance expectations.
An optimistic outlook for international financing, reviving consumer demand, the stable situation in the energy sector, a sufficient supply of goods, and favorable weather conditions positively affected business expectations.
At the same time, more intense missile and drone attacks on port infrastructure, the risk of further terrorist attacks against energy facilities, rising business costs for energy, labor and logistics, higher fuel prices due to increased excise duty rates, shortages of qualified staff, and accelerating inflation remained restraining factors.
This is evidenced by the business activity expectations index (BAEI), which the NBU calculates on a monthly basis, apart from the forced break in March–May 2022. In October, the BAEI, at 49.4, came close to its neutral level, up from 48.7 in September.
Although declining slightly, the performance expectations of trading companies remained the most optimistic, thanks to reviving consumer demand, a sufficient supply of goods, and reestablished supply chains, the sector’s index being 51.9 in October, down from 52.1 in September.
Respondents expected an increase in trade turnover and in the amount of goods purchased for sale.
In contrast, trading companies worsened their expectations about their stocks of goods for sale.
Respondents continued to report intentions to cut their trade margins.
Industrial companies reported guarded performance expectations on the back of difficult security conditions and rising energy, labor and logistics costs, the sector’s index being 49.8 in October, down from 50.3 in September.
Respondents expected a further increase in the amount of manufactured goods, and in the number of new orders for products.
Companies also improved their expectations about the amount of unfinished products and finished goods stocks.
In contrast, respondents slightly worsened their expectations about the number of new export orders for products.
Construction companies reported a more negative economic outlook amid a seasonal decline in construction of roads and infrastructure, the sector’s index being 49.6 in October, down from 50.1 in September.
Respondents expected construction volumes to increase further, while slightly worsening their expectations of an increase in the number of new orders, and in purchases of raw materials and supplies.
Companies were more confident about an increase in purchases of contractor services due to weaker expectations of a rise in the cost of these services.
Respondents continued to say that they were less pessimistic about the availability of contractors.
Although improving, the economic expectations of services companies remained the most guarded, because of more intense missile and drone attacks on port infrastructure, rising costs, and shortages of qualified staff, the sector’s index being 47.2 in October, up from 44.6 in September.
For the first time in the last six months, respondents expected a slight increase in the number of new orders for services.
Companies were also less downbeat about the amount of services provided and the amount of services that are being provided.
With strong expectations of robust growth in purchase prices, companies across all surveyed sectors declared intentions to raise their selling prices.
The labor market situation remained challenging.
Respondents across all of the surveyed sectors reported intentions to cut their staff, with respondents from industrial and construction companies expecting to lay off more staff, and those from trading and services companies expecting to lay off fewer staff.
Background: This survey was carried out from 3 October through 23 October 2024.
A total of 489 companies were polled.
Of the companies polled, 44.0% are industrial companies, 27.4% services companies, 23.1% trading companies, and 5.5% construction companies; 30.9% of the respondents are large companies, 27.8% medium companies, and 41.3% small companies.
Out of the surveyed companies, 32.3% are both exporters and importers, 9.2% are exporters only, 19.4% are importers only, and 39.1% are neither exporters nor importers.
The findings presented reflect only the opinions of the respondents (top managers of companies), and should not be considered as NBU assessments.
The monthly business activity expectations index (BAEI) is a tool for conducting latest assessments and detecting trends in economic development.
It is calculated on the basis of surveys of Ukrainian real sector companies.
Monthly business activity expectations indices are calculated on the basis of respondents’ replies.
These indices are as follows: sectoral indices (for each sector of the economy) and a composite index (describes the country’s economic performance over a month).
A value of 50 corresponds to the neutral level.
Index values above the neutral level indicate positive expectations.
Read more about the October 2024 survey in the Monthly Surveys of Companies Subsection of the Publications Section on the NBU’s official website.
The NBU started posting monthly survey results in the open data format.
The results of the next (November 2024) survey will be published on the first business day of December 2024.