The population and businesses’ sense of prosperity improved in November

According to the November 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the population and businesses has slightly increased: on a scale between -100 and +100, the value of prosperity index decreased from -29.9 to -26.4 regarding households, while it decreased from -26.1 to -20.7 regarding businesses. The improvement in business and population indicators is also explained by the readjusted energy prices. The sense of prosperity index remaining in the negative range is still determined by the higher inflation environment induced by the Russian-Ukrainian war and the uncertainty induced by the economic sanctions. Major turbulances in the financial, foreign exchange, and primarily in the commodity markets have also reinforced uncertainty. The sense of prosperity is possible to significantly improve when the war ends, inflation reduces, the great uncertainty in the energy markets is eliminated, and lower prices develop.

Three of the sub-indices of the population’s sense of prosperity have improved compared to those of the previous month, thus, overall, the index has also become more favourable compared to October. The most favourable is still the perception of the employment situation, the value of which has increased from last month’s -13.8 to -12.2. Households have the most negative perception of the inflation processes, the sub-index of which has slightly decreased from -87.2 to -88.5. The perception of the economic environment has increased from the value of -41.5 to -34.4 compared to last month, while that of the financial situation from -24.8 to -21.3.

The population is more pessimistic about the domestic unemployment data of the previous 12 months near their homes. The proportion of those presuming a significant decline has changed to 4.3 percent from 3.9 percent in the previous month, while the proportion of those perceiving a small decrease has changed from 14.7 percent to 10.6 percent. The unemployment rate is perceived as unchanged by 42.1 percent of those surveyed after 41.7 percent in October, while 17.5 percent (17.0 percent in October) have detected a small increase and 12.0 percent (10.3 percent in the previous month) a significant increase.

The biggest positive shift in the case of the population occurred in the perception of the economic situation in the next 12 months. 11.4 percentage points fewer people expect a significant deterioration, while 1.4 percentage points fewer people estimate a slight deterioration, 3.1 percentage points more people expect an unchanged situation, and 5.6 percentage points more people expect a slight improvement. Furhtermore, 0.2 percentage point more people believe their financial situation will be much better compared to the data a month ago.

Regarding the corporate survey, the value of all sub-indices has become more unfavourable compared to last month. The sub-index of the economic environment has improved from -45.9 to -37.3, that of the sectoral environment has changed from -30.4 to -22.4, that of the production environment from -17.6 to -13.4, while that of the business environment from -35.0 -30.1.

Companies also experienced the biggest improvement in the development of the forint/euro exchange rate expected over the next twelve months. On average, 16.8 percent of companies expect a significant currency depreciation, up from 28.5 percent in the previous month. A slight depreciation is expected by 2.1 percentage points more than forecasted last month. At the same time, in November, 22.4 percent of those surveyed predicted an unchanged exchange rate, up from 13.6 percent in October. At the same time, a slightly stronger currency is expected by 1.5 percentage points more, while a significantly stronger currency is expected by 0.7 percentage point fewer than in October.

Companies are mostly pessimistic about the development of their company’s expected sales prices in the coming year. In fact, 16.5 percent of the companies surveyed (a decrease of 4.9 percentage points compared to the previous month) believe that their future prices will increase significantly. Another 46.1 percent (a rate of 0.5 percentage point lower than in October) say their prices are slightly increasing. The category of ‘no change’ was indicated by 5.8 percentage points more, the category of ‘slightly decrease’ was indicated by 0.2 percentage point more, and the category of ‘significantly decrease’  was indicated by 0.5 percentage point fewer companies as their forecast.

The task of the prosperity research conducted by 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.