The Business Activity Expectations Index (BAEI), calculated by the National Bank of Ukraine (NBU) on a scale from zero to 100, rose by 0.7 points in October but fell by 2.3 points in November to 47.2 points, dropping below the February 2024 level (47.5 points), as reported on the regulator's website.
"The intensification of hostilities, the resumption of power outages due to Russian attacks on the energy system, rising costs for energy, wages, and logistics, accelerating inflation, a significant shortage of skilled labor, and seasonal factors hindered economic activity and impacted the weakening of business expectations,” the NBU listed the negative aspects affecting the current level of the BAEI.
The most optimistic assessments were provided by representatives of the trade sector, although their sector index also fell by 0.5 points in November to 51.4 points. It is noted that this industry was the only one among all surveyed that positively evaluated its business activities, aided by domestic demand and adequate product supply.
"Trading companies forecasted an increase in turnover and the volume of goods purchased for sale, and they were also positively inclined regarding the stock of goods available for sale. Respondents still expected a decrease in trading margins,” commented the NBU on the survey results.
Next in line were industrial enterprises, whose sector index dropped by 3.1 points in November to 46.7 points, due to deteriorating security conditions, power supply disruptions, and rising production costs.
"Unlike the previous month, respondents expected a decrease in the volume of produced goods and new orders for products, and they also downgraded their assessments of both new export orders and unfinished production,” noted the NBU.
However, at the same time, businesses slightly improved their assessments of finished goods stocks and anticipated an increase in raw materials and supplies.
Service sector enterprises also lowered their performance assessments amid rising logistics costs, electricity shortages, and a lack of skilled labor: their sector index stood at 44.8 points, losing 2.4 points in November.
"Respondents downgraded their assessments of the volume of services provided and new service orders. Expectations regarding the volume of services in progress remained weak,” emphasized the regulator.
The most pessimistic outlook regarding their current economic results came from construction enterprises, whose sector index fell by 6 points in November to 43.6 points. It is indicated that the negative assessments are linked to seasonal slowdowns in road and infrastructure construction, as well as a shortage of skilled workers.
"Builders anticipated a decrease in construction volumes, new orders, and the purchase of raw materials and supplies. Survey participants significantly downgraded, yet retained positive expectations regarding the volume of services purchased from contractors amid strengthening negative assessments of their availability and slowing price increases,” commented the central bank.
According to the NBU, against the backdrop of slowing growth rates of purchase prices, industrial, construction, and service sector enterprises expected lower price growth rates for their own products and services, while only trade respondents anticipated a slight strengthening.
"The labor market situation remains challenging. Respondents from all surveyed sectors expected a reduction in personnel numbers, most significantly in the service sector,” stated the regulator, based on survey results.
It is clarified that the monthly survey of enterprises was conducted from November 4 to 21. A total of 504 enterprises participated. Among the surveyed, 44.2% were industrial companies, 27.6% were from the service sector, 23.4% were from trade, and 4.8% were from construction; 29.6% of respondents were large enterprises, 28.8% were medium-sized, and 41.7% were small.
At the same time, 31.7% of the surveyed enterprises engaged in export and import operations, 10.1% conducted only export operations, 18.3% conducted only import operations, and 39.9% did not engage in foreign economic activities.