Sense of prosperity among households worsened in July, while that of companies improved slightly

Sense of prosperity among households worsened in July, while that of companies improved slightly

According to the July 2023 survey of Századvég Konjunktúrakutató, the sense of prosperity worsened among households but improved slightly among businesses. The household index, measured on a scale of -100 to +100, fell from -19.4 to -22.5, while the business index rose slightly from -16.4 to -16.2. The prosperity index remained in negative territory, driven by the Russian–Ukrainian war, a higher inflationary environment and uncertainty caused by economic sanctions. Less turbulence and falling prices in financial, foreign exchange and commodity markets than in previous periods, as well as a stronger forint exchange rate, have all reduced uncertainty to some extent. A stronger improvement in the sense of prosperity will only be possible if the war ends, inflation falls from its peak, and energy prices remain durably low.


Three sub-indices of the household prosperity index fell and one improved compared to the previous month, and, overall, the index deteriorated slightly compared to June. Employment continues to be the most positively assessed, with a change from -0.7 in the previous month to -4.8. Households are most negative about inflationary developments, but this index has been on a steady upward trend since January, rising from -86.9 in June to -84.3 in July, reflecting the declining inflation outlook. The perception of the economic environment deteriorated from -26.7 in the previous month to -29.4, while that of the financial situation went from -17.5 to -21.1.


For households, the biggest positive shift was for major expenditures planned for the next year (e.g. buying a home, renovation, buying a car). The share of respondents who plan to spend more increased by 2.8 percentage points from 19.7% in June to 22.5% in July.

Household savings expectations for the coming year have shifted towards the negative, with respondents expecting their households to save much less in the coming year than they have done so far. Respondents indicating the category “much more” were 1.6 percentage points lower than in the previous month, at 1.6%. 12.6% of respondents indicated that their household would save “slightly more”, unchanged from the previous month. 35.4% of respondents expect to save “the same” amount, 9.4 percentage points less than in June. 19.3% expect to save a little less, up 2.5 percentage points, and 27.2% expect to save a lot less, up 9.0 percentage points from the previous month.


The business survey showed an improvement in three sub-indices and a decrease in one sub-index from the previous month. While the economic environment indicator decreased slightly from -28.9 in the previous month to -29.2, the industrial environment indicator improved more significantly, from -13.9 to -11.4, the production environment indicator improved from -11.2 to -11.1 and the business environment indicator improved from -25.6 from -25.2.


For businesses, the biggest negative change of opinion was expressed on the development of the forint-euro exchange rate. Managers forecast an increasing depreciation of the Hungarian currency over the next year. While the share of those expecting the forint to strengthen significantly changed by 0.1 percentage points to 1.3%, the share of those expecting the Hungarian currency to strengthen slightly decreased by 4.1 percentage points to 13.2%. 24.1% of respondents expect the exchange rate to remain unchanged (-5.0 percentage points), 34.4% expect it to weaken slightly (+0.9 percentage points) and 16.7% expect it to weaken strongly (+7.2 percentage points).

Another significant change for businesses is the change in selling prices over the next year, which is positive for companies and negative for inflation containment. After 51.6% in the previous month, 46.5% of businesses expect sales prices to fall or stagnate in July.

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.

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