Bulgaria's Business Climate Down 3.3% Aug 2012 M/M

In August 2012 the total business climate indicator in Bulgaria decreases by 3.3 percentage points, compared to its July level.

The data was released Tuesday by the country's National Statistical Institute, NSI.

The decline is attributed to the more unfavorable business climate in all of the observed sectors - industry, construction, retail trade and service sector.

The composite indicator "business climate in industry" decreases by 2.8 percentage points in comparison with the previous month, which is due to the worsening managers' assessments about the present business situation of the enterprises. The inquiry also registers a decrease of production assurance about orders from abroad which is associated with reduced expectations about the activity of the enterprises over the next 3 months.

The uncertain economic environment and insufficient domestic demand continue to be the main factors outlined by the industrial entrepreneurs as an obstacle for the development of their business.

Regarding selling prices, the expectations are that they will preserve their level over the next 3 months.

In comparison with July, the composite indicator "business climate in construction" drops by 6.9 percentage points, mainly due to the increased pessimism in the construction entrepreneurs' expectations about the business situation of the enterprises over the next 6 months, along with more unfavorable expectations about construction activity over the next 3 months. Regarding employment in the branch, the forecasts are also in the direction of decrease.

The uncertain economic environment and financial problems remain the main factors limiting the activity of the enterprises in the branch, as in August the negative influence of the factor "insufficient demand" strengthens. Regarding selling prices in the branch, the prevailing managers' expectations are for preservation of their levels over the next 3 months.

The composite indicator "business climate in retail trade" decreases by 1.7 percentage points in comparison with the previous month, which is due to the more moderate retailers' assessments about the business situation of the enterprise. However, their expectations for the next 6 months are more favorable. A slight optimism is noticed in the forecast about orders placed with suppliers and the volume of sales.

The factors limiting with the most extent the activity of the enterprises continue to be the uncertain economic environment, the insufficient demand and the competition in the branch.

Regarding selling prices, the managers do not expect an increase over the next 3 months.

In August, the composite indicator "business climate in service sector" decreases by 2.0 percentage points in comparison with July, due to shifting of the managers' expectations about the business situation of the enterprises over next 6 months from "better" towards preserving "the same." However, their expectations regarding demand for services over the next 3 months are more favorable, but without additional hiring of personnel.

The uncertain economic environment and competition in the branch remain the main factors limiting the development of business in the branch.

Regarding selling prices in the service sector, the inquiry does not register expectations for an increase over the next 3 months.

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