The population's sense of prosperity shows a slight improvement


The population's sense of prosperity shows a slight improvement

According to the September 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the population and businesses has slightly improved after half a year of decline: on a scale between -100 and +100, the value of prosperity index increased from -26,6 to -26.3 regarding households, while it decreased from -23,4 to -24.8 regarding businesses. The decline in the indicator of businesses is still caused by the higher inflation environment induced by the Russian-Ukrainian war and the uncertainty induced by the economic sanctions, and by the higher volatility in the financial and primarily in the commodity markets. The sense of prosperity is possible to improve when the war ends, the uncertainty in the energy markets is eliminated, and lower prices develop.

1

Although three of the four sub-indices have deteriorated compared to last month, but overall, the index has improved compared to August. The most favourable is still the perception of the employment situation, the value of which has decreased from last month’s -6.1 to -8.1, thus it is negative for the second month in a row. Households have the most negative perception of the inflation processes, the sub-index of which has slightly decreased from -86.3 to -86.4. The perception of the economic environment has improved from the value of -39.4 to -35.8 compared to last month, while that of the financial situation from -24.1 to -24.2.

2

The population is more pessimistic about the development of the expected employment figures over the next 12 months. The proportion of those projecting a significant decline rose to 18.8 percent from 15.3 percent in the previous month, while the proportion of those expecting a small decrease changed from 28.0 percent to 29.2 percent. Following 26.7 percent in August, 23.1 percent of respondents expect the employment situation to remain unchanged, while 16.9 percent expect a slight increase (compared to 16.7 percent in August) and 4.2 percent expect a significant improvement (compared to 6.4 percent in the previous month).

The biggest positive shift in the case of the population occurred in the perception of next year’s economic situation in Hungary. 8.3 percentage points fewer people expect a significant deterioration, while 2.4 percentage points more people estimate a slight deterioration, 3.0 percentage points more people expect an unchanged situation, and 2.5 percentage points more people expect a slight improvement compared to the data a month ago.

3

Regarding the corporate survey, the value of three of the four sub-indices has become more unfavourable compared to last month. The sub-index of the economic environment has improved from -43.7 to -42.2, that of the sectoral environment has changed from -24.5 to -30.4, that of the production environment from -15.0 to -16.7, while that of the business environment from -32.7 to -34.2.

4

Over the past 12 months, companies have been able to increase the price of their products to a greater extent on average than the increase reported last month. Now, only 14.6 percent of those surveyed indicated a price increase of less than 1 percent. At the same time, nearly half (49.0 percent) of those surveyed reported a rate higher than 7 percent.

Companies are most pessimistic about the future demand for their products and services. Indeed, 16.6 percent of the companies surveyed (an increase of 1.7 percentage points compared to the previous month) believe that the future demand for the products and services produced in their industry will decrease significantly, while another 37.6 percent (5.8 percentage points higher than the August rate) say that it will decrease slightly. Companies have indicated the “no change” category by less than 5.0 percentage points, the “slightly increasing” category by less than 1.7 percentage points, and the “significantly increasing” category by less than 1.6 percentage points as their forecast.


 

About the prosperity index

The task of the prosperity research conducted by the Századvég Konjunktúrakutató Zrt. 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 perception 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, the positive ones (e.g., expected improvement in the economic situation) receive positive scores, while the 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 households and companies perceive the processes in the economy. 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.

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