The prosperity index remained in negative territory, determined by the prolonged Russia-Ukraine war and the uncertainty caused by economic sanctions. Significant improvement in economic expectations 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 strengthened and one weakened compared to the previous month. Employment continued to be the most positively assessed, with an improvement from -3.3 in the previous month to -2.9. The perception of the economic environment improved in September from -30.0 points in the previous month to -28.3, while that of the financial situation went from -14.6 to -11.3. At the same time, households’ inflation perceptions have become slightly less optimistic, as the indicator fell slightly from -64.1 in August to -67.3.
The biggest positive shift in the household survey compared to August was that households are already planning to spend more in the coming year.
In fact, when asked “Do you plan to make major expenditures (e.g. buying or renovating a home, buying a car, etc.) in the next year?”, the economic picture was more favourable in September, based on households’ responses. In fact, 24.0% of the surveyed residents plan to spend more, up from 18.8% the previous month. No responses were 75.7%, a decrease of 5.0 percentage points from August.
Looking at households’ sense of prosperity by educational level, economic sentiment fell only among those with vocational qualifications or who are skilled workers, where the prosperity index decreased by 3.7 index points. At the same time, those with no more than primary education, those with secondary education and those with a college or university degree showed a more positive sense of prosperity (+2.2, +3.4 and +2.8 index points respectively). Thus, regarding current economic sentiment, the index value of -12.5 for those with tertiary education is the most optimistic value, followed by -15.9 for those with secondary education, then -18.4 for those with primary education or less and -20.6 for those with a vocational qualification or a trade.
For the business survey, one sub-index improved, while three weakened. The production environment sub-index strengthened from -10.9 to -10.6 index points in September. The industry environment index fell from -5.6 to -7.5, the business environment index from -24.6 to -25.2 and the economic environment index from -29.3 to -31.2.
The biggest change for companies in September 2024 was regarding future exports of businesses. When asked “How do you expect your company’s exports to develop in the next 1 year?”, in September, business leaders reported an overall increase in exports. Following the August survey, 85.1% of companies are not exporting in September and are not expected to export in the next year. Among exporting companies, there is a shift towards higher export volumes. While in August, 1.0% predicted a significant decline in exports in the future, this was 0.1% in September. Slightly decreasing exports are forecast by 1.0% of the surveyed companies (-0.4 percentage points), while 8.0% of the respondents expect exports to remain unchanged (+0.2 percentage points). 3.9% (+0.3 percentage points) expect exports to grow slightly, while 1.3% (+0.8 percentage points) expect them to grow significantly.
The September survey showed the biggest negative shift in the difficulty for companies to raise funds for development. Fewer respondents said it was not difficult at all (16.9% of respondents, -6.0 percentage points), while 26.6% (+2.2 percentage points) said it was rather not difficult. 51.4% of companies had difficulties (29.8% said it was rather difficult and 21.6% said that it was absolutely difficult) to raise the necessary resources for development. This is higher than the previous month (49.0%).
Looking at the sectoral breakdown of companies, the sense of prosperity increased for two sectors and decreased for three sectors on average. While the average sense of prosperity increased by +2.3 index points to -12.4 index points in agriculture and by +1.6 index points to -16.2 index points in retail trade, the average decline in businesses’ economic expectations in September was due to the 0.3 index points for industry, 0.4 index points for services and 7.4 index points for construction. That month, the strongest sense of prosperity was recorded for agriculture (-12.4) and the weakest for construction (-19.0).
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.
