Bulgaria Business Climate Shows Signs of Recovery

The business climate in Bulgaria is showing some signs of recovery, according to the latest figures from the National Statistical Institute (NSI), with a 0,4 points m/m increase in November.

The NSI figures showed that the November increase is attributed mostly to the service and industrial sectors.

The industrial business climate index growth of 1,0 point in November was mainly due to improved assessment of industrial managers about the enterprises' current state. However, in the meantime, the business expectations for the upcoming 6 month period are slightly down compared to October.

Industrials register a reduction in manufacturing activity in the last three months and have negative expectations for the upcoming ones. The managers further forecast increase of the unemployment rate.

The most serious problem hampering the sector is an uncertain economic environment, followed by lower local and international demand which in November are seen as a bigger obstacle than in October.

80% of the managers expect that sales prices will maintain their current levels in the next 3 months, but the relative share of those more optimistic about prices going up is increasing.

The construction business climate index fell by 2,9 points compared with October, the reason is pessimistic estimates and expectations of entrepreneurs. Construction activity is currently low, continues to shrink, and the outlook for the next 3 months is for the trend to continue. Orders in the sector continue to be reduced, according to the NSI survey. The job cuts will also continue.

Managers described the greatest difficulties in the construction industry as the uncertain economic environment and lack of financial security along with increasing delays in payment.

In November, those who forecast price reduction continue to outnumber the optimists in the construction sector.

In the retail industry the business climate index maintains its October levels with managers predicting keeping the same volume of sales and orders. Here again, the uncertain economic environment, is seen as the main difficulty, followed by competition and reduced demand.

In the services sector the business climate index is up 2,6 points compared to October due to slightly more optimistic managers' assessment and forecasts for the demand in the upcoming 3 months. NSI further registers reduction of the number of those employed in the sector and there are no expected new jobs for the 3 months ahead.

The uncertain economic environment and lower demand are also the main factors seen as hindering the services sector. Managers expect a continuing fall in prices in the next two months.