According to the survey conducted by Századvég Economic Research Institute in October 2021, there has been a substantial improvement in feeling the economic prosperity regarding households and businesses. The value of the prosperity index interpreted on a scale between -100 and +100 increased further for both households and companies: from -2.9 to -1.5 for households and from -3.0 to -0.2 for companies. Both indices approached the value prior to the coronavirus. If the dynamic growth of the Hungarian economy can continue, the two prosperity indices may continue to rise. However, this requires the combination of several factors: in addition to lower inflation, the mitigation of the shortage of raw materials affecting industry and construction and of energy price shocks affecting the corporate sector and transport difficulties.
Substantial improvement in feeling the economic prosperity
Three sub-indices of the prosperity index for households improved and one sub-index deteriorated in October. After the improvement to -30.8 of the previous month, the assessment of inflation corrected to around the value of August and thus stood at -36.3 points, i.e., it has still the most unfavourable assessment of the four sub-indices. The assessment of employment, which improved further from the previous month, from +6.5 to +9.2, remains the most favourable. There is also a small improvement in the assessment of the financial situation and the economic environment: for the former, from -5.1 to -4.3, and for the latter, from -3.7 to -1.4.
After the increase of the previous months, the proportion of people working more than 45 hours a week has decreased. While in September 38.0 percent of workers said they worked more than 45 hours a week, that rate dropped to 31.7 percent in October. In contrast, the proportion of people who work between 30 and 45 hours a week rose from 53.7 percent to 59.1 percent. The proportion of part-time workers hardly changed, it was 9.0 percent.
The proportion of those who are planning a larger purchase in the coming year (for example purchase of a car, housing property or housing improvement) has decreased this month, from 27.7 percent of the previous month to 23.0 percent.
In the corporate survey, the value of 3 sub-indices improved, while in one case there was a deterioration. There was a slight deterioration in the industry environment, from +15.3 points to +14.7 points, but the value of this sub-index is still the most favourable. The assessment of the economic environment improved the most, the value of the indicator increased from -5.0 points of the previous month to +2.4, i.e., overall, the assessment became positive. The last example of this was in January 2020. The assessment of the production environment slightly increased, from -5.3 to -3.9. In contrast, there is a greater improvement in the business environment, from -3.5 to +0.5, i.e., here the positive responses also became a majority.
Of the individual issues, the biggest improvement that is significant in itself occurred in the assessment of the economic situation of the previous year. Following the 22.1 percent in September, 14.2 percent of respondents said that the economic situation significantly deteriorated, while following the 31.3 percent, 23.9 percent said that it slightly deteriorated in the past year. While in September 18.0 percent of respondents said they had not experienced a change, in October 17.2 percent said so. As a result, the proportion of those who assessed the economic situation as slightly better than a year earlier increased from 17.9 percent to 27.9 percent, whereas the proportion of those who rated the economic situation as significantly improving compared to a year earlier increased from 6.0 percent to 13.9 percent.
The second biggest change – also in a positive direction – occurred in the assessment of the country’s competitiveness for the past year. While a proportion of 12.1 percent in September rated competitiveness as significant and 22.3 percent as slightly deteriorating, these two rates dropped to 9.5 percent and 18.5 percent in October, respectively. In addition, the proportion of those who saw the country’s competitiveness unchanged fell from 30.5 percent to 26.7 percent. In contrast, following the proportion of 22 percent in September, competitiveness was seen to slightly improve by 28.9 percent and significantly improve by 12.0 percent instead of 6.1 percent.
About the prosperity index
The task of the prosperity research conducted by the Századvég Economic Research Institute is to provide decision makers and analysts with information about the current and expected processes of the economy in the near future. Our institute has been compiling corporate and household prosperity indices on a monthly basis since August 2019. In our monthly survey, we ask 1,000 company executives and 1,000 adult residents about their assessment of the economic situation and their expectations thereof. Regarding the two groups, we ask 29 and 28 questions, respectively, which cover a wide range of economic life. Of the responses, positive ones (e.g., expected improvement in the economic situation) receive positive scores, while negative ones (expected decline in employment) receive negative scores. Then, by averaging the scores and converting them to a scale between -100 and +100, the prosperity indices are obtained. Thus, the higher the value of the prosperity indices, the more favourable the processes in the economy are for households and companies. In addition, regarding both household and corporate surveys, we also prepare 4 sub-indices for each by using some of the questions, which illustrate the development of economic well-being in an area.