Businesses have eased their assessment of their results, but predict price increases and staffing problems - NBU

Businesses have somewhat softened their assessments of their performance, according to the results of the NBU survey of enterprises in July, UNN reports.

Details

"In July, businesses somewhat softened their estimates of business activity," the NBU said.

In July 2024, the index of business activity expectations (IRSA) increased to 44.4 from 43.6 in June.

As indicated, they had a positive impact on business expectations:

• Adaptability to energy supply problems, 
• stable operation of the sea corridor, 
• stable inflation expectations, 
• easing currency restrictions,
•  seasonal factor. 

At the same time, the deteriorating security situation, the risk of further terrorist attacks on critical infrastructure and its lengthy recovery, deteriorating exchange rate expectations, and a significant shortage of skilled workers remained constraining factors, as they hampered the economic activity of enterprises in all surveyed sectors, the NBU said.

Construction firms significantly improved their restrained estimates due to the seasonal revival of activity, as well as budget financing for the construction and rehabilitation of housing, infrastructure, roads and highways.

Enterprises of the industry kept their expectations low due to the shortage of electricity, intensification of hostilities, and lack of skilled workers.

Enterprises in the service sector mitigated their negative assessments despite significant power outages, lower demand, and higher business costs.

Enterprises of trade slightly downgraded their expectations under the influence of prolonged power outages and increased exchange rate expectations. "Trade companies predicted a further decline in turnover and purchases of goods for sale, for the third consecutive time provided negative estimates of inventories/residuals of goods for sale, increasing expectations of an increase in their value, and were also set to further reduce trading margins," the NBU said.

"Enterprises in industry, trade, and construction predicted an increase in the growth rate of both purchase prices and prices/tariffs for their own products/services, while respondents in the service sector were set to slow down slightly, despite increased expectations for growth in purchase prices," the NBU said.

"The situation on the labor market remains difficult," the NBU said. 

Only managers of construction companies expected to maintain the number of employees at the level of the previous month. Respondents in industry and services predicted a reduction in staff, albeit at a slightly slower pace than in the previous month. The most restrained estimates were provided by managers of trade enterprises.

For reference

The monthly survey of enterprises was conducted from July 4 to July 23, 2024. A total of 435 enterprises took part in the survey.