site.btaDecember Business Climate Worsens in Industry, Construction and Services

Sofia, December 29 (BTA) - The total business climate indicator lost 1.6 percentage points in December from November, the National Statistical Institute said. The business climate is shown to have worsened in industry, construction and the services sector. In retail trade, it has remained almost unchanged from the previous month.

Industry

The business climate indicator in industry decreased by 1.9 percentage points (Annex, Figure 2) which is due to more reserved expectations of entrepreneurs about the business situation of their companies over the next six months. The inquiry also shows diminishing security about orders from abroad, coupled with more pessimistic expectations about business over the next three months.

Uncertain economic environment and shortage of labour remain the main hurdles to business development in industry as in December the latter shows a new long-term peak (31.4 per cent) since 2003.

As regards selling prices in industry, the prevailing expectations among managers are for them to remain unchanged over the next three months.

Construction

In December, the composite business climate indicator in construction dropped by 3.5 percentage points as result of less favourable assessments for the ongoing business and expectations for future business among construction entrepreneurs.

Respondents said that the inflow of new orders dwindled over the last month and they have pessimistic expectations about their business over the next three months. The main problems for businesses in this sector remain uncertain economic environment, competition and shortage of labour (as the inquiry shows a decrease of the negative effect of the first two factors).

The majority of the managers expect selling in construction to remain unchanged over the next three months.

Retail trade

The composite business climate indicator in retail trade remained mostly unchanged from its November level. Retailers' assessment about their present business situation and their expectations for the next six months remain favourable. The expectations about the volume of sales and order placed with suppliers over the next 3 months, however, have worsened.

The main problem for business in this sector remains competition, followed by insufficient demand and uncertain economic environment (with the adverse effect of the last two decreasing during the last month).

Retailers' expectations are for selling prices to increase over the next three months.

Service sector

The composite business climate indicator in the service sector decreased by 0.9 percentage points, mainly due to a change of managers' expectation about their business situation over the next six months from "better" to "the same". Respondents were more reserved as regards the present and expected demand for services.

The biggest hurdles to business development remain competition and uncertain economic environment.

The majority of the managers expect selling prices in the sector to remain unchanged over the next three months.