Business Conjuncture in Bulgaria, January 2021

In January 2021, the total business climate indicator increases by 6.9 percentage points compared to December 2020 as a growth of the indicator is registered in all observed sectors - industry, construction, retail trade and in services.

Industry
The composite indicator ‘business climate in industry’ increases by 6.1 percentage points which is due to the improved industrial entrepreneurs’ assessments and expectations about the business situation of the enterprises. Their forecasts about the export and production activity over the next 3 months are also positive.

In the period from October 2020 to January 2021, the production assurance with orders (measured in number of months) increases from 4.5 to 4.9, and the average capacity utilization increases by 1.2 percentage points and it reaches 74.0%.

The most serious difficulties for the activity of enterprises remain the uncertain economic environment, insufficient domestic demand, insufficient foreign demand and factor ‘others’.

Concerning the selling prices in industry, certain expectations for an increase are registered, although the majority of the managers foresee them to remain unchanged over the next 3 months.

Construction

 In January, the composite indicator ‘business climate in construction’ increases by 5.1 percentage points as a result of the more favourable construction entrepreneurs’ assessments and expectations about the business situation of the enterprises. As regards the new orders over the next 6 months, their forecasts are also in a direction of an increase, which according to them will lead to increase of the activity in the short term.

The uncertain economic environment continues to be the main factor limiting the business development as in the last month an increase of its negative influence is observed. In the second and third place remain shortage of labour and factor “others”.

The expectations of the prevailing part of the managers are the selling prices in construction to preserve their level over the next 3 months.

Retail trade

The composite indicator ‘business climate in retail trade’ increases by 11.2 percentage points which is due to the optimistic retailers’ assessments and expectations about the business situation of the enterprises.

At the same time, their forecasts about both the volume of sales  and orders placed with suppliers over the next 3 months have improved. The most serious problems for the activity of the enterprises remain uncertain economic environment, insufficient demand and competition in the branch as in the last month strengthen of unfavourable impact of the last two factors is reported.

Concerning the selling prices, the majority of the retailers foresee them to remain unchanged over the next 3 months.

Service sector

In January, the composite indicator ‘business climate in service sector’ increases by 6.0 percentage points mainly due to the more favourable managers’ expectations about the business situation of the enterprises over the next 6 months. The inquiry also registers certain improvement in their forecasts about the demand for services over the next 3 months.

The main obstacles for the business continue to be connected with the uncertain economic environment, factor “others”, insufficient demand and competition in the sector.

As regards the selling prices in the service sector, the expectations of the prevailing part of the managers are for preservation of their level over the next 3 months.