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Bulgaria's Business Climate Up 0.7% in July 2011
Date: 28/07/2011
Bulgaria's Business Climate Up 0.7% in July 2011

In July 2011, the total business climate indicator In Bulgaria increases by 0.7%, compared to its level from the previous month, the National Statistical Institute, NSI, has informed Thursday.

Improvement is observed in the industry, construction and retail trade sectors, while in the service sector there is deterioration. The long-term average level of the indicator is by 9.9% higher.

The composite indicator "business climate in industry" increases by 1.1 percentage points compared to June. Regarding the current business situation of enterprises the assessment is more favorable and is only by 1.7 percentage points below its long-term average.

In July 2011 the inquiry recorded an increase of the average capacity utilization by 1.9 percentage points (to 72.0%) in comparison with April this year. For the same period the production activity of the enterprises also increased. Despite of some increase of orders from abroad, the total production assurance with orders keeps its level from the latest months. At the same time, enterprises report a surplus of capacity with regard to the expected demand over the next months.

The major problems for the business development in industry continue to be the uncertain economic environment and the insufficient demand, as the uncertain economic environment is still above the usual for the last 10 years average value.

The latest inquiry further registers a decrease of the expectations about an increase of the selling prices in industry over the next 3 months.

In July 2011 the composite indicator "business climate in construction" increased by 2.6%, mainly due to elevated optimistic expectations of construction entrepreneurs about the business situation over the next 6 months. In the next half year the managers expect higher inflow of new orders in construction, which, according to their opinions, will lead to some increase of short-term activity, but without expectations about additional hiring of personnel.

According to business inquiries data, there are signals for suspension of downward trend in construction activity. The present production assurance with orders rises from 5.3 months in April to 5.6 in July 2011 and reaches its long-term average level.

The uncertain economic environment and the financial difficulties continue to be the main negative factors in the branch. Although they still mark values above long-term average levels their negative influence is significantly diminished in the last 4 months at the expense of the competition problem increment. With regard to the selling prices in construction there are weak expectations about an increase over the next 3 months.

In July the composite indicator "business climate in retail trade" increased by 3.6 percentage points compared to the previous month. Due to the fluctuating behavior of the indicator over the last 2 years it is early to say that this increase is a signal for improvement of business conjuncture in retail trade. At the same time, the long-term average value of the business climate is still by

10.5 percentage points higher than the July level of the indicator.

The uncertain economic environment continues to be the major factor limiting the activity for two thirds of enterprises in the sector. In July, compared to June, the negative influence of the factor competition" strengthens.

Regarding selling prices, the managers as a whole do not foresee an increase over the next 3 months.

In July, only in the service sector the composite indicator "business climate" drops below its June level by 5.0 percentage points. The decrease in larger extent is due to more reserved managers' expectations about the business situation of enterprises over the next 6 months than to the negative correction in the assessments about present business situation. Regarding services' demand, the present tendency is toward improvement. The inquiry registers some fluctuations in the expectations over the next 3 months, but as a whole, the direction is positive, which is not valid for the personnel.

The uncertain economic environment is the most serious factor limiting the activity of the enterprises in the sector. The second factor is the competition in the branch, its negative influence strengthened and reached in July its maximum value of 52.7% since May 2002.

The prevailing managers' expectations regarding selling prices are for preserving of their level over the next 3 months.

Topic: Business

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