Businesses downgrade expectations amid power outages, higher tariffs, and staff shortages - NBU
Kyiv • UNN
Businesses in Ukraine have been reporting negative performance for the second month in a row due to rising costs, power outages, weak investment demand, and a shortage of skilled workers.
Businesses have negatively assessed their performance for the second month in a row. This is evidenced by the index of business activity expectations (IRSA), released by the NBU on Monday, UNN reports.
Details
In June 2024, the IRSA dropped to 43.6 from 48.0 in May.
The further deterioration in the expectations of enterprises in all sectors was caused, in particular, by "rising business costs due to electricity shortages caused by Russian attacks on the energy system and tariff increases, weak investment demand, and a significant shortage of skilled workers.
In particular, according to the NBU
▪️ Enterprises of the industry weakened their estimates of the results of their activities in the short term under the influence of the deteriorating security situation, significant power outages and rising production costs: the sectoral index in June was 45.5 (in May - 48.8).
▪️ Enterprises of trade maintained negative expectations against the background of deteriorating energy supply situation, increased electricity tariffs and deteriorating exchange rate expectations: the sectoral index is 46.4 (previously 47.7).
▪️ Construction enterprises also significantly weakened their estimates due to weak investment demand, prolonged power outages and lack of skilled workers: the sectoral index is 43.0 (previously 49.8).
▪️ Enterprises in the service sector for the second time in a row were the most restrained in their assessment of their economic performance and worsened their expectations for economic prospects, given the outflow of skilled workers, increased costs due to the shortage of electricity and lower demand: the sectoral index dropped to 39.7 (from 47.2).
Industrial, trade, and service companies predicted an increase in the growth rate of both purchase prices and prices/tariffs for their own products/services, while construction companies were optimistic about a slight slowdown.
The situation on the labor market has deteriorated, according to a NBU survey. Managers of enterprises in all sectors expected a reduction in the total number of employees, most significantly in the service sector, the National Bank reported.
