Managers Reported: The Price of Goods and Services Will Rise
In July 2019, the overall business climate indicator remained at roughly the same level as the previous month. A decline in business conditions was observed in industry and construction while in retail trade the June level remained unchanged. The indicator is rising only in the service sector.
The composite indicator "business climate in industry" dropped by 1.7 percentage points as a result of the slightly deteriorated estimates and expectations of industrial entrepreneurs for the business condition of enterprises. The survey also takes account of less favourable export and production forecasts over the next three months.
Average capacity utilisation from April to July increased by 1.2 percentage points to 76.9%, with expected surplus capacity in the coming months.
Labor shortages and insecure economic environment continue to be the main obstacles to business development in the sector.
With regard to sales prices in the industry, some expectations of an increase were recorded, although most of the managers did not foresee a change in the next three months.
In July, the composite business climate indicator in the construction sector declined by 0.8 points, due to a shift in the ratings of business developers to the current business condition of businesses from "good" to "satisfactory". In terms of construction activity over the last three months, the survey recorded some decrease compared to June, with forecasts for the next three months remaining reserved.
The shortage of labor, the precarious economic environment and competition in the industry are the factors that make the most of the activity.
With regard to sales prices in the construction, managers expect some increase over the next three months.
The composite indicator "business climate in retail trade" remained at its level from the previous month. The retailers' expectations for business development in the sector over the next six months are positive. At the same time, their forecasts of sales volumes and orders to suppliers over the next three months remain favourable, albeit more reserved than in June.
Competition in the industry, insufficient demand and uncertain economic environment continue to be the most serious obstacle to the business. Over the past month, there has been an increase in the negative impact of the labor shortage factor.
With regard to sales prices, traders' expectations are to maintain their level over the next three months.
In July, the composite indicator "business climate in the services sector" rose by 1.7 points mainly due to the managers' optimistic assessments of the current business situation of the enterprises. In terms of service demand, the current trend is assessed as improved but their expectations over the next three months are less favourable.
The main difficulties for the development of the activity remain related to the competition in the industry, the uncertain economic environment and the shortage of labor force.
Managers expect some increase in sales prices in the services sector, although most of them do not expect any change over the next three months.
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