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© Romanian Central Bank |
Business Survey
May 2008: Broadly Favourable Developments of Key Indicators in industry and Construction
For May, the estimates of company managers polled by the National Bank of Romania point to a favourable outlook for key indicators in industry and particularly in construction, where the activity has a seasonal nature.
Output is expected to grow further, as illustrated by the balance of answers* standing at 28 percent and 89 percent respectively in industry and construction. A similar path is anticipated for the volume of orders, partly driven by external orders addressing industrial companies.
The same as in April, the opinions on the stocks of finished goods are mixed, pinpointing a slight absorption in industry, where the negative balance of answers stands close to nil (-7 percent), and a build-up in construction (where the balance of answers more than quadruped to +39 percent). Stocks of raw materials are foreseen to range within normal limits in both sectors, as illustrated by over 90 percent of the respondents in industry and 74 percent of the respondents in construction.
The chief factors stymieing output growth in both sectors will be the subdued demand (revealed by 18 percent of respondents), the exchange rate movements and inter-company arrears.
As far as the labour market is concerned, respondents foresee further payroll cuts in industry, albeit at a slower pace, given the significant improvement in the balance of answers compared to the prior month (-6 percent from -19 percent). More than half of the polled managers expect this indicator to stabilise. By contrast, payrolls in construction are set to grow thanks to seasonal influences, with the balance of answers doubling to +66 percent.
For May, expectations suggest producer price increases in both industry and construction, as shown by the positive balances of answers standing at 42 percent and 47 percent respectively. This indicator is seen remaining virtually unchanged in the opinion of about 54 percent of total managers polled.
Over the period, investment dynamics in both sectors are set to remain positive, with the balance of answers rising from the previous month. In industry, profitability ratio is anticipated to expand only marginally considering that, although the balance of answers widened by another 3 percentage points over April, it still remains rather low compared to the 12-month average (10 percent versus 18 percent). As for construction, the economic performance will fare even better, with the balance of answers standing at 61 percent.
* Shows the trend of the concerned indicator and is calculated as the difference between the weight of positive and that
of negative answers in total answers
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