What do expectation surveys say?

As another year comes to an end, the results of tendency surveys seem to be more and more interesting. It doesn’t go unnoticed that the Real Sector Confidence Index has been constantly increasing for some time now.

Recently, CBRT real sector confidence index has risen from 102 pts to 103.6 pts in December by a 1.6 points increase compared to the previous month. As the items that helped improve the upward trend of the index were reviews on total order amount, amount of expenditure on fixed assets, export order amount for the next three months, total employment rate in the next three months, general state of affairs and production volume in the next three months respectively; reviews on total order amount in the last three months and available finished goods inventory pushed the index towards a downward direction. This goes to show that expectations for the future are slowly improving.

From an in-depth perspective: while short term upward expectations for production volume remain at the same level as the last month, upward expectations for domestic market order amount and export order amount seems to have improved. And the trend in favour of those who expect an increase in the amount of expenditure on fixed assets in the next twelve months as well as in employment rate in the next three months seems to have grown stronger, all of which seem greatly encouraging indeed.

Another notice worthy development is that the percentage of those who are more optimistic about the general trend in their respective industrial sector compared to the last month hits 15.8% while the percentage of the pessimists declined to 12.3% as 71.9% says that the trend remained intact.

“We need more effective domestic and foreign polices…”

As this survey was conducted among the employees/executives of 1794 manufacturing companies, I can easily say that the results were pretty realistic. One of the key findings of the survey is that capacity utilization rate in manufacturing industry has increased by 0.2 points to a level of 79.9% in December when compared to the previous month.

All of these developments strengthen my theory that business people and all other individuals can focus on what they do when the stability dominates both domestic and foreign politics, which allows a quicker improvement in economy. However, this positive trend must bring positive impacts on pricing behaviour as well. This way, inflation rates can be brought to a desired level in 2020.

An industry that looks to the future with confidence must worry less about the economy. As risks diminish, prices will diminish equally.