Sectoral Shifts in Bulgaria: November's Business Sentiment Recap

In a recent report released by the National Statistical Institute (NSI), November 2023 witnessed a diverse range of shifts in Bulgaria's business climate index across significant industries. The overall business climate index for the month settled at 21.6%, reflecting a marginal decline from the preceding month's figure of 22.0%.

Industry: A Cautious Downturn

The composite indicator gauging the "business climate in industry" saw a modest drop of 2.9 points, sliding from 23.5% to 20.6%. This decrease stemmed from a more reserved outlook among industrial entrepreneurs, both in their current assessments and future expectations concerning enterprise conditions. Concerns were notably raised regarding the assurance of production orders and an apprehensive outlook for production activity over the next three months.

Challenges persist for this sector, predominantly revolving around the uncertain economic landscape and a prevailing shortage of labor, identified by 50.0% and 32.0% of enterprises, respectively. Expectations regarding industrial sales prices over the coming three months were predominantly inclined towards stability.

Construction: Encouraging Uptick

Contrastingly, the construction sector observed an encouraging surge in the "business climate in construction" composite indicator, marking an uptick of 3.5 points from 20.1% to 23.6%. This rise was propelled by improved assessments and optimistic prospects among construction contractors regarding enterprise conditions. Forecasts for future construction activity, spanning the next three months, remain consistent.

However, persistent obstacles in this domain encompass the uncertain economic environment, rising material prices, and the ongoing challenges posed by labor shortages. Around 25.4% of managers expect an increase in construction sales prices in the upcoming three-month period.

Retail: Maintaining Stability

The "business climate in retail trade" mirrored stability, maintaining a level reading from October at 27.5%. Retailers continued to hold positive views on past and anticipated sales volumes in the coming three months. Despite this stability, challenges persisted, notably linked to the uncertain economic scenario, industry competition, and the persistent shortage of labor. Interestingly, an increased negative influence was observed in the past month.

Majority forecasts from retailers indicated an expectation of unchanged sales prices over the upcoming three months.

Services: Moderate Uptick in Confidence

In the services sector, the "business climate in the service sector" indicator exhibited a slight increase of 0.8 points, climbing from 15.1% to 15.9%. This modest improvement primarily stemmed from more favorable assessments of current enterprise conditions by managers. Expectations for the future, however, showed a shift towards a more moderate outlook, contrasting with the recent improvement in the demand for services.

Similar to other sectors, persistent challenges include the uncertain economic environment, stiff competition, and ongoing labor force shortages. Forecasts suggested a likelihood of a slight increase in sales prices within the services sector over the upcoming three months.

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