The Monthly Index of Confidence (MIK), which examines the mood of Polish companies, fell by 0.9 pts m/m to 101.1 in March this year, the Polish Economic Institute (PIE) reported. Changes for the better in the country’s economy are expected by 27% and changes for the worse by 23% of enterprises.
This year’s March MIK is 4.3 points higher than last year’s reading (96.8 points). Indicators for employment, wages, capacity and liquidity reached levels above neutral (100 pts). Despite the decline in the MIK in most industries, positive sentiment prevailed in trade, manufacturing and construction, particularly in medium-sized and large companies, it was reported.
“Although we recorded a slight deterioration in business sentiment in March, the MIK is still above the neutral level (100), which means that for most components these sentiments are still optimistic. This is particularly true for wages and liquidity. On the positive side, the decline in new orders does not have a negative impact on company hiring, and the favourable liquidity of companies is a good proxy for investment. The fact that entrepreneurs see the future of their company more favourably than the economic situation of the country also encourages cautious optimism,” said Urszula Kłosiewicz-Górecka of the PIE Economic Foresight Team.
In the March MIK reading, as in the February reading, values are above neutral in four of the seven components observed. These are the indicators for employment, wages and salaries, production capacity and liquidity. Two of these increased m/m, these being wages and salaries (117.5 points, up 5.1 points m/m) and liquidity (121.5 points, up 6.7 points m/m). The next two components that are above neutral in the March reading, although they recorded m/m declines but improved y/y performance, are employment (104.7 pts, down 1.7 pts m/m, up 5.3 pts y/y) and production capacity (101.3 pts, down 0.4 pts m/m, up 7.9 pts y/y).
March’s MIK indices for industries recorded a decline m/m, the exception being trading companies, which recorded an increase in the index by 9.7 points m/m to 109.4 points. Positive readings on employment and wages, capacity held and liquidity contributed to the improvement in sentiment at trading companies. Positive sentiment also prevailed in construction (102.5 points, down 3.5 points m/m) and manufacturing (100.5 points, down 5.2 points m/m), it also indicated.
Companies see their company’s future better than the country’s economic situation. One-third of entrepreneurs believe that the situation in their companies will improve in the next three months, only 12% expect it to worsen and nearly half do not expect any changes. Large companies are least optimistic about their future. While almost a third of companies of other sizes expect their situation to improve, only 16% of representatives of large companies do so. However, as many as 74%. do not expect any significant changes in their company between March and May. Changes for the better in the country’s economy are expected by 27% and changes for the worse by 23% of companies. However, for 16%, the country’s future economic situation is difficult to predict, PIE concluded.
The MIK is created by measuring 7 key areas of business activity: sales value, new orders, employment, wages and salaries, production capacity, investment expenditures, financial situation on a representative sample of 500 enterprises in four size categories and five industries. The levels of the MIK take values in the range and the index reference point is a reading of 100, which is the neutral level.
Source: PIE and ISBnews
