Businesses have once again evaluated their current performance positively for the third consecutive month, as reported in the Business Activity Expectations Index by the National Bank of Ukraine (NBU) on July 3.
In June, the business climate index remained above the neutral level of 50 points, rising to 50.8 compared to 50.5 in May.
Positive expectations were influenced by the slowing pace of raw material and energy cost increases, gradual stabilization of production and logistics chains, improved inflation and exchange rate expectations, and a boost in domestic demand.
Construction companies provided the most optimistic assessments due to favorable weather conditions, the need for expanding western logistics, and the construction and repair of roads. This sector’s index in June surged to 58.6, a significant increase from 51.3 in May. Builders expressed heightened expectations for construction volume growth, new orders, and procurement of raw materials. They maintained moderately high expectations for subcontractor services but lowered their expectations regarding their availability to a neutral level.
Meanwhile, retail businesses continued their positive evaluation streak for the fourth consecutive time. This trend can be attributed to stable consumer sentiments, an increased supply of goods, and a slowdown in inflation rates. The sector index for June held steady at 52.5, only slightly lower than 52.7 in May.
Respondents expressed expectations for increased turnover volumes and purchases of goods for sale. Similarly to the previous month, they favored slower price increases for purchased goods, lowered their assessments of purchase price growth, and maintained expectations of a reduction in trading margin.
In the industrial sector, enterprises saw an improvement in their economic performance attributed to the deceleration in raw material and energy cost growth, the restoration of production and logistics chains, and a slowdown in inflation rates. The sector index rose to 51.0 in June, compared to 50.4 in May. They continued to anticipate growth in production volumes and new orders. However, unlike the previous month, they expected a decline in the volume of new export orders and slightly moderated their negative assessments of backlogs.
For the second consecutive month, service sector enterprises continued to be the only sector with negative assessments of their economic prospects. They cited factors such as the low purchasing power of the population, weak demand, and logistical challenges. The sector index remained stagnant at 48.9, unchanged from May. Respondents expressed pessimism regarding new order volumes. However, for the third consecutive month, they anticipated an increase in the volume of services provided and services in progress.
Despite some respondents softening their forecasts, expectations for purchasing price increases and prices/tariffs for their own products/services remained high.
Assessments regarding employment were mixed. Construction and service sector respondents, for the first time in a while, anticipated an increase in the overall number of employees. On the other hand, industrial and retail enterprises expected a reduction in employment.