In October, Manufacturing Was the Most Pessimistic Sector

The optimism index in October was 77.8 percentage points, down from 85.9 the previous month. The best sentiment is in the tourism sector. Given that GDP in the second quarter, according to DZS data, was down 2.5 percent compared to the same period in 2009, marking the sixth consecutive quarter of year-on-year decline in quarterly GDP, it is not surprising that HLIPO remains in a recession phase.

HLIPO was at 77.8 percentage points in October, down from 85.9 the month before. Expectations for the next six months have also decreased, which is not surprising given the not-so-bright macroeconomic forecasts. The optimism has been affected by the GDP decline, primarily caused by a drop in personal consumption and a decrease in gross investment in fixed capital, as well as the announcement of an 11.7 percent increase in the number of unemployed in September. The situation in October is rated poorly by 44.6 percent of surveyed entrepreneurs (up from 36 percent in September), while 38 percent are satisfied with business opportunities, which is five percent less than the previous month.  Satisfaction with the past tourist season is also reflected in the optimism index for that sector, which stands at 99.4 percentage points, the highest rating among sectors.

Following are transport and services (89.8), then trade (70.5), which sees no optimism for the next six months regardless of pre-holiday spending. Construction is at extremely low levels with HLIPO at 68 points, which is also reflected in the official data showing a 12 percent decline in construction work in 2010. However, the most pessimistic sector is manufacturing, which has recorded a significant drop in the index compared to September, from 89.6 to 65.8. Expectations for the next six months are extremely low – only 56.3 percentage points.  In September, industrial production did record a growth of 3.1 percent compared to September 2009, but the end of the negative trend is a result of the base effect, as there was a 9.6 percent decline in September of last year. In the first nine months, production decreased by 1.5 percent, and its recovery primarily depends on domestic demand, which remains weak. (B. B.)