According to the December 2024 survey of Századvég Konjunktúrakutató, household economic sentiment strengthened by 0.4 index points, and business economic expectations weakened by 0.2 index points from the previous month. Thus, the household index, measured on a scale of -100 to +100, improved to -16.0, while the business index weakened to -15.2. In the December survey, the most positive change in household sentiment was related to job stability. Businesses’ largest change was in their ability to enforce prices. Although a weaker capacity to raise prices has a negative impact on the business prosperity index through corporate profitability, it is positive for the economy as a whole because of contained inflation.

The prosperity index remained in negative territory, determined by the uncertainty caused by the prolonged Russia-Ukraine war and the economic sanctions. Significant improvement in economic expectations is likely to occur if the war ends, inflation remains in the central bank’s target range (between 2% and 4%), the interest rate environment becomes more favourable, and energy markets see sustained low prices.

Two of the sub-indices of the household prosperity index strengthened, and two weakened compared to the previous month. Employment continued to be the most positively assessed, improving from -3.2 in the previous month to -1.0. In December, the perception of the economic environment increased from -27.8 points in the previous month to -27.1, while that of the financial situation decreased from -12.0 to -12.2 and the assessment of inflation trends decreased from -59.2 to -64.3.

The biggest positive shift in the household survey, compared to November, is that households are less worried about losing their jobs in the next 6 months.

When asked, “Are you worried that either you or a family member will lose their job in the next 6 months?” household responses revealed a more positive and stable employment situation in December compared to November. 48.9% of residents surveyed (up 1.1 percentage points from November) are not at all worried about losing their job, and 23.3% (up 2.9 percentage points) are rather not worried. 15.4% of respondents (3.7 percentage points less) said they were “rather worried”, while 10.7% (0.7 percentage points less than in November) were very worried about losing their job.

Looking at households’ sense of prosperity by level of education, one of the four categories showed a significant improvement, while three showed a deterioration. For those with primary education or less, the prosperity index improved by 5.8 index points to -13.0 index points. Among those who have completed secondary school and those with vocational school or vocational school leaving certificate, as well as those with tertiary education, the sense of prosperity has become less optimistic (by 0.8, 2.3 and 0.2 index points, respectively). Overall, in terms of current economic sentiment, the -13.0 index point for those with no more than primary education is the most optimistic, followed by -15.7 for those with tertiary education, -16.4 for those with vocational school or vocational school leaving certificate and -18.2 for those with secondary education.

For the business survey, one sub-index improved, while three weakened. While the production environment sub-index improved from -10.0 to -9.5 index points in December, the industrial environment sub-index weakened from -5.6 to -6.2, the economic environment sub-index from -28.4 to -30.5 and the business environment index from -24.7 to -25.0.

For businesses, the largest positive change in December 2024 was in business investment.

When asked “Has your company made an investment in the last 1 year?” in December, business leaders gave generally more positive answers than in November. This month, 33.0% of businesses said they had invested in the past year, compared with 2.6 percentage points less in November.

Another marked change has been made in the way companies enforce their prices. Indeed, in December, companies reported that they had been able to make fewer price adjustments on average over the past year than they had reported in November. It is important to underline that, although this is negative for corporate profitability, it is a remedy for the steps taken to keep inflation low.

Looking at the sectoral breakdown of companies, the sense of prosperity improved for one sector and decreased for four sector on average. While services saw an increase of 0.3 index points, businesses’ sense of prosperity fell by an average of 1.1 index points in trade and construction, 1.0 index point in agriculture and 0.7 index point in industry in December. That month, the strongest sense of prosperity was recorded for agriculture (-7.4) and the weakest for construction (-17.7).

• About the prosperity index

The purpose of the prosperity survey conducted by Századvég Konjunktúrakutató is to provide information to decision-makers and analysts on current and near-term economic developments. Since August 2019, our Institute has been producing the business and consumer prosperity index on a monthly basis. Our monthly survey asks 1,000 business leaders and 1,000 adult residents about their assessment of the economic situation and their expectations. For the two groups, we ask 29 and 28 questions respectively, covering a wide range of economic life. Among the responses received, positive ones (e.g. expected economic improvement) are given a positive score, while negative ones (expected decrease in employment) are given a negative score. The scores are then averaged and converted to a scale between -100 and +100 to obtain the prosperity indices. Thus, the higher the value of the prosperity indices, the more positive households’ and companies’ perception of the economy is. In addition, for both the household and the business survey, 4 sub-indices are constructed using a subset of the questions to illustrate the evolution of economic sentiment in a particular area.