The prosperity index remained in negative territory, determined by the prolonged Russia-Ukraine war and the uncertainty caused by economic sanctions. Further significant improvement in the sense of prosperity will be possible 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.
Three of the sub-indices of the household prosperity index weakened and one improved compared to the previous month. Employment continued to be the most positively assessed, with a decline from 2.1 in the previous month to 0.7, but remaining positive. Households have slightly less positive views on inflationary developments, with the indicator falling from -74.9 in February to -77.2. The perception of the economic environment deteriorated from -17.0 points in the previous month to -23.7, while that of the financial situation improved from -11.2 to -9.9.
In the household survey, households’ expectations regarding labour-market stability showed a notable positive shift from February.
When asked “Are you worried that you or one of your family members will lose your or his/her job in the next 6 months?” the overwhelming response was that they were not. More than half (52.9%) of respondents (5.4 percentage points more) said they were not at all worried about it. 22.9% of respondents said they were rather not worried (up 1.1 percentage points from the February survey). However, 3.3 percentage points fewer (14.3%) said in March that they were more afraid of losing their job, and 2.5 percentage points fewer (8.7%) said they were very afraid of losing their job.
In March, the sense of prosperity among households improved in two age groups: 30-39s (from -17.5 to -15.5) and the 50-59s (from -18.6 to -14.3). The most optimistic age group is now the 18-29s (-12.7), while the most pessimistic age group is the 40-49s (-17.8). In the oldest age group surveyed (over 60), the current index value is -13.9.
For the business survey, one sub-index improved, while three weakened. The industry environment index fell from -3.4 to -4.7, the business environment index from -19.0 to -22.1 and the economic environment index from -20.8 to -24.1. While the production environment sub-index fell from -8.9 in the previous month to -8.8.
For businesses, the largest negative change in March 2024 was in future exchange rate expectations. When asked “What do you think the exchange rate of the forint against the euro will be in the next 1 year?”, overall slightly more respondents (1.0%, up 0.3 percentage points) said it would strengthen significantly, and 10.4% (down 1.6 percentage points) said it would strengthen slightly. However, compared to February, 4.5 percentage points fewer (26.0%) said that the exchange rate would not change. In addition, 1.6 percentage points more (42.8%) forecast a slightly weakening exchange rate in the coming year, while 3.3 percentage points more (13.2%) forecast a significantly weakening exchange rate.
Looking at the sectoral breakdown of companies, the sense of prosperity increased for two sectors and decreased for three sectors on average. On average, economic sentiment strengthened by 1.9 index points in trade and 0.2 in services and weakened by 14.1 in agriculture, 3.2 in industry and 8.7 in construction from February to March. The significantly more negative sense of prosperity in agriculture is mainly explained by the threat of dumping of goods from Ukraine.
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.
