Business barometer polls conducted by the Statistical Institute (NSI) over the month show a positive development of the business climate. In July the composite Business Climate Index, based on the opinions of the business owners and executives polled by the NSI, has preserved its upward trend, reaching an all-time high, 21.9% and exceeding the all-time average by 17.1 percentage points. The index rise is due solely to the growing optimism regarding the expected condition of enterprises in the following six months. The Confidence Index has gone up 12.5 points, which has resulted from two of the index components: higher projections for the production activities of enterprises in the following months, and an expectedly shrinking stock of finished goods. In the industrial sector, executives are optimistic about exports and do not expect an upward pressure on inflation stemming from fluctuations of industrial prices. The business environment in the construction sector has remained favourable over the month. The assessment of the current construction activity and the expectations for the following three months have shifted from `no change` to `intensified activity`. Construction sector prices are not likely to go up. The retail trade environment has also developed in a positive direction. In this sector, the composite Business Climate Index has climbed 3.9 points. Higher expectations are related to retail sales and commissions to suppliers. Again, no inflation hazards are predicted for commodity prices. The general business climate in the transport sector is favourable. The assessments of the current development of such businesses and the demand for transport services mark an improvement on April polls but are lower than the average long-term level. The expectations concerning future activities, the decrease in idle capacities and staff mobility are exceedingly optimistic. Public transport businesses traditionally experience greater difficulties. It is noteworthy, however, that privately-owned transport companies are also beginning to face problems related to worn-out vehicles. Transport fares are not expected to go up. Since May 2001 barometer polling has been funded jointly by the NSI and the European Commission under a bilateral agreement. The NSI has committed itself to conduct the polls in line with EU directives.

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