Corporate sentiment in September largely deteriorates

Corporate sentiment largely deteriorated m/m in September, with weakening in manufacturing, construction, wholesale, and two out of four service sectors and improvement only in financial services, a monthly report from stats office GUS showed.

MANUFACTURING – Sentiment edged down m/m in manufacturing, with the sentiment indicator down 4 pts to 3 points. Current assessment of order portfolio deteriorated on the domestic and foreign front, also production is reduced slightly. Expectations for orders and production deteriorated and are least positive in the year to date. The current financial situation is assessed negatively, worst since March. Forecasts for financial situation remain positive. Inventories are only slightly excessive. Expectations for slight employment reductions, which appeared in June, persisted. Prices of manufactured goods are expected to hold flat in the coming months, survey participants indicate.

CONSTRUCTION – Moods in the construction sector in September deteriorated, as the sentiment indicator declined 4 pts to -5 pts. The assessment of output, the order portfolio and financial situation are more negative than in August. Companies to face increasing backlogs in payments for their work. Forecasts concerning order portfolio, output and financial situation worsened from August. Employment reductions will likely be deeper than expected last month. Construction work prices are also expected to see deeper declines. Builders predict a slight decrease in backlog on foreign markets. Capacity utilization in the sector held flat at 80%.

COMMERCE – Sentiment deteriorated in the wholesale segment and held flat in retail. The sentiment indicator for wholesale trade edged down 4 pts m/m to 7 pts and held flat in retail trade at plus 4 pts. Current assessments for wholesale are positive, but weaker than in July. Forecasts are also positive, but weaker. In retail, current assessment and forecasts deteriorated. Financial situation forecasts are positive but deteriorating in wholesale, and negative and deteriorating in retail. Inventories remain excessive in both wholesale and retail. Employment in wholesale and retail is expected to rise a bit. Price growth is expected to whole in wholesale, and accelerate in retail.

SERVICES – Sentiment in service industries were mixed across subsectors. Sentiment edged down in logistics for the second straight month, albeit from a recent peak. Views to current demand and financial conditions have held stably negative for some five months and forecasts for demand and sales remain favorable at levels seen one month prior. For the first time since April, respondents are not forecasting a worsening of financial conditions. Moods in hospitality continued their seasonal decline on a deterioration for all elements of current and forecast conditions. A synthetic moods indicator in IT and communications was stable month to month. Views to current conditions remain strong and outlook strengthened. In finance, demand and sales remain strong as to date, but still-strong views to current financial conditions slipped from prior levels. Prices are seen declining in 3 of four service sectors, only allowing for a “slight” increase in financial services.

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