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Polish companies believe the second half of the year will be better - the latest enterpreneurs' optimism index

29-07-2014

In July Polish entrepreneurs felt that business climate improved further. They were also more optimistic about the future. Q2 slowdown may therefore be temporary – as indicated by the results of the Entrepreneurs’ Optimism Index in July – an index based on surveys conducted among members of the Employers of Poland.

 

In surveys conducted in July 2014 current business situation was assessed at 106.9 points compared to 105.9 points in June. Expectations for the next six months also improved – from 120.9 points last month to 129.5 in July.

 

Main results of the Entrepreneurs’ Optimism Index – data from July 2

106.9

(1.0)

General assessment of the current business situation

129.5

(8.6)

General assessment of the business situation in the next six months


Results indicate a growing optimism in Polish companies – 38 per cent of those polled reported an improvement of their company’s business situation in July. Responses from the enterprises participating in the surveys show that despite the slowdown in Q2 the recovery of the economy will continue.

 

Polish entrepreneurs – in spite of a better current situation assessment – observe a slower improvement in the number of new orders. Their purchasing activity is growing changing the downward trend from June. Slower decrease in inventories and selling prices may also be a sign of economic recovery. There are more and more signs that companies have used up inventories of finished products, raw materials and semi-finished products and will have to stock up on tangible current assets. Decreasing pressure on lowering prices may positively influence financial results of companies. This is, however, accompanied by increases in prices of goods and services they buy, which eliminates this positive effect to a great extent. Decrease in payment delays was smaller. Decrease in payment delays was smaller and the speed of employment increase was lower third month in a row.

 

There was a decided increase in entrepreneurs’ optimism about forecast for a six-month period. This index – that now stands at 129.5 points – is close to its level from March this year. Forecasted dynamics of new orders fell again, although not as much as last month. Expected purchasing activity is going up – nearly half of the companies participating in the surveys expect it to grow. Values of other components of the index shows that entrepreneurs are increasingly cautions in their plant to invest and increase employment, which indicates a growing uncertainty. 

 

Business voice

Comments from polled entrepreneurs:

 

“Most output will be sold in the second half of 2014”.

 

Industrial processing company

 

 

“Prices for services are stable or go down. There aren’t many new enquiries. Large international logistics concerns take on orders they wouldn’t be interested in the past.”

 

Transport company

 

 

„On the whole business situation is difficult. Many bakeries close down. Healthful bread production based on natural fermentation is becoming unprofitable as it is labour-consuming,  requires higher employment and longer work time.”

 

Food processing company

 

 

„Current situation is influenced by procurement procedure in which the main criteria is price. There is still lack of qualified staff.”

 

Service sector company

 

 

„Credit is more difficult to get as credit margins are increasing, which directly affects credit eligibility. Credit decisions made by banks are more and more unpredictable and waiting time is getting longer.”

 

Financial intermediary

 

 

Current situation assessment

 

 

Indicator

Results in July 2014

Change

General assessment

106.9

 Quicker improvement

New orders

118.9

 Slower growth

Purchasing activity

102.1

 Trend change, growth

Inventories

96.6

 Slower decrease

Payment delays

97.6

 Slower decrease

Purchase prices

118.7

 Trend change, growth

Selling prices

90.6

 Slower decrease

Employment

104.1

 Slower growth

 

     

 

Forecast for the next six months

 

Indicator

Results in July 2014

Change

General assessment

129.5

 Quicker improvement

 

New orders

124.1

 Slower growth

Purchasing activity

130.7

   Faster growth

Inventories

90.6

   Trend change, decrease

Payment delays

  110.0 

   Faster growth

Purchase prices

117.4

   Faster growth

Selling prices

88.8

   Slower decrease

Employment

98.4

   Trend change, decrease

Investment

112.0

   Slower growth

 

Entrepreneurs’ Optimism Index

Entrepreneurs’ Optimism Index is a monthly survey conducted among members of the Employers of Poland (ca. ten thousand companies employing in total approx. five million people) in which they assess current business environment and forecast economic situation in business for the next six months. It is modelled after a German index by IFO. When the index is below 100 points, the economic situation is perceived as worsening, and when it exceeds 100 points, it is seen as improving. 100 points indicates no changes.