Mixed business expectations in October

Greece’s index of business expectations in industry, calculated on the basis of production prospects and estimates on the level of stocks and total demand, improved from 103.6 points in September to 104.6 points last month, the Foundation for Economic and Industrial Research (IOBE) said in its latest paper yesterday. However, the improvement, mainly due to estimates of lower stocks and stronger projected orders, must be considered transient, IOBE warns, as the fall in stocks is circumstantial and a growing number of firms consider the volume of orders from abroad to be lower than usual. The assessment is corroborated by a series of other data: The months of guaranteed production ahead remained the same as in September at 5.6; factory capacity utilization fell from 78.2 to 77.3 percent; the percentage of enterprises that think their productive activity does not face impediments fell from 74 in July to 66 percent in October; and the firms believing that inadequate demand is the main adverse factor rose from 20 to 22 percent in a month. Industrial firms expect production, sales and exports to rise in the next three to four months, but by less than previously. Prospects for exports are seen as stronger in the Balkan neighbors than in EU partners. The index of business expectations in construction fell from 135.0 points in September to 126.5 in October, attributed exclusively to a fall in the number of firms predicting a rise in employment, although most firms still expect such a rise. The number of months of guaranteed work ahead remained at the quite high level of 17.3, and expectations of higher prices in the immediate future were slightly higher. In the retail sector, there was a definite improvement in business expectations from 97.3 in September to 102.0 in October, mainly attributed to stronger expectations of sales levels; 66 percent of respondents predict stability and 25 percent a rise. IOBE notes that the services sector seems to have entered a protracted period of stagnation, according to the expectations expressed since the beginning of the year; the index for this sector remained at September’s level of 75.5 points; 45 percent of service firms consider the general economic climate to be unfavorable, while 58 percent think demand is falling; only 21 percent expect prices to rise in coming months.

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