Confidence among entrepreneurs in the assessment of the economy in August dropped compared to the previous month

Economic sentiment is deteriorating, falling to a 17-month low in August. It decreased the most in services, but there was also a drop in construction, industry and trade. Consumers also showed lower optimism.

The decline in entrepreneurs´ confidence in the development of the economy in Slovakia continues for the third consecutive month. Also in August, confidence dropped the most in services, but it also decreased significantly in construction and industry, the mildest decrease was in trade. Consumer pessimism also increased, although the drop in confidence was only moderate, but its rate reached the lowest level since March last year.

Economic sentiment is measured by five sub-indicators, which express the expectations and confidence of entrepreneurs in four sectors (industry, construction, trade and services) and consumers. Partial indicators range from -100 points (maximum pessimistic answers) to +100 points (maximum optimistic answers).

The confidence indicator in industry (seasonally adjusted) dropped by 6 percentage points (p.p.) in August to -8, mainly due to a drop in orders, primarily in manufacture of vehicles and other non-metallic products. The development was also adversely affected by the increase in the stock of goods, mainly in manufacture of pharmaceutical products, metals and metal products, and electrical equipment.

Confidence indicator n services experienced a significant decline for the third month in a row, which caused the confidence indicator to drop to the lowest level since March last year. In August, the confidence indicator decreased by 9.6 p. b. to the level of 0.7. The decline was caused by the worsening assessment of two indicators, namely the business situation over the past three months, as well as the demand for services over the past three months. There was an improvement in the assessment of the expected development of demand for services in the next three months.

The deterioration of the consumer mood in Slovakia continues, the consumer confidence indicator (seasonally adjusted) dropped month-on-month for the fourth consecutive month. In August, compared to the previous month, it decreased by 0.6 points to the level of -29.4, which is the lowest value since March last year. In particular, concerns about the expected general economic situation, expected savings and the related financial situation of households increased. Respondents evaluated the development of unemployment slightly more optimistically.

In August, the confidence indicator in trade in August fell by 3.7 p.p. compared to July, to a value of 23. Respondents negatively evaluated the growth of stock of goods and expect a lower fulfillment of requirements for suppliers, especially in the repair and maintenance of motor vehicles and in the retail trade of other goods.

After last month's growth in August, the seasonally adjusted confidence indicator  in construction dropped again, by 7.5 points to -12. The current result was influenced by more unfavorable evaluations of the overall level of orders and expected employment.