Favourable business climate, continued optimistic expectations - IEER Business Climate Survey findings of October 2018

The latest Business Climate Survey of IEER is based on the answers of 2830 CEO respondents. According to the results, Business Climate Index was at 55 points as of October 2018, which has been the highest since records began in 1998. Trends that had started to improve in the previous half continued. Business climate is still regarded by companies as being very favourable, which can mainly be put down to the fact that expectations about investments in construction and machinery became significantly more optimistic in the previous half year. Uncertainty Index, currently at 37 points, is down two points compared to April 2018 results, meaning that the situation assessment of Hungarian businesses have become more homogeneous in the past two quarters.

IEER Business Climate Index by company features

The Business Climate Index was the highest for construction companies (+65 points), followed by industrial firms and companies specialising in commerce (61 and 60 points, respectably). Companies offering business services are a distant fourth (40 points). Half-on-half figures show that only construction and commercial companies saw a significant increase – compared to April, their indicator jumped 10 points...

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MBET Nov-Dec 2018

Hungarian companies as suppliers

This analysis is based on the July 2018 wave of IEER's Quarterly Business Climate Survey, in which 400 CEOs were involved. The structure of the sample is the same each quarter: it contains 300 small and medium-sized enterprises (20-249 employees) and 100 large enterprises (250+
employees). Economic output and sectors are both representative. The survey mainly concerns the business situation and short-term business expectations of enterprises. In this wave, the popularity of supplier activity was also surveyed.

Findings on how widespread supplier activity was in Hungary are presented in Figure 1. According to them, 16% of the surveyed 400 companies were involved in supplying to other companies in 2017. Of all the background variables examined, the only one whose correlation to supplying activity had statistically significance was exports. It may be safe to conclude that more export-oriented companies are also more liable to act as suppliers. (Only 11% of non-exporting companies act as suppliers, while mainly exporters that take over 50% of their annual revenues from exports are more than twice as liable, their proportion as suppliers being 26%.)..

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MBET Sept 2018

IEER quarterly business climate survey results, July 2018

The Quarterly Business Climate Index survey of IEER reveals the opinion of 400 managers on the situation and the outlook of their businesses. The basis used for calculating the Quarterly Business Climate Index and the Quarterly Uncertainty Index is a sample of 300 small and medium-sized enterprises (20-249 employees) and 100 large enterprises (employing 250 persons or more). Surveyed small and medium-sized enterprises were evaluated by using our SME Outlook Business Climate Index and SME Outlook Uncertainty Index.

According to our survey conducted in July 2018, the level of business confidence in Hungary was slightly higher quarter on quarter. The Quarterly Business Climate Index was up from 39 points in April to 42 points. The index has never been this high since our business climate records began in 2010 (see figure 1). The Quarterly Uncertainty Index was at 26 points, 2 points lower than the level of the previous quarter. Uncertainty Index values suggest that the business situation has been given a more consistent evaluation by domestic companies compared to the previous quarter.

If business confidence levels are examined in the small and medium-sized sector only, we can see that the upward trend since July 2017 is interrupted: the SME Outlook Business Climate Index has dropped from 38 points in April to 34 points (see figure 2). The SME Outlook Uncertainty Index is at 30 points, having decreased by four point since April 2018 - this value indicates that the opinion of small and medium-sized enterprises is more unified than in the previous quarter...

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MBET August 2018

Corporate reactions to the raise of the minimum wage/guaranteed minimum salary of qualified staff

The analysis is based on the April 2018 wave of IEER Business Climate Survey. The IEER Business Climate Survey is the most extensive of its kind in Hungary, the one that involves the most companies. This year, our results were based on the answers of 3274 CEOs. The results offer an insight into companies' business situations and short-term expectations. Respondents were also asked about the impacts of a raised minimum wage and guaranteed minimum salary. The sample size of respondents can be considered representative with regard to company size and economic sector.

Our brief analysis examines eight potential measures that can be reactions to the January 20181 raise of the minimum wage/guaranteed minimum salary for qualified staff. CEOs were asked to fill in the form below.
The raise of the minimum wage to HUF 138,000 and the guaranteed minimum salary of qualified staff to HUF 180,500 have resulted/will result in the following measures at your company in 2018:

• wages of those earning above the minimum wage are also increased to avoid wage tension
• planned staff recruitment is cancelled
• redundancies are made
• projected investments are postponed
• employees entitled for a raise are given new duties
• employees entitled for a raise are re-hired as part-time employees
• other benefits (e.g. perks) of employees involved are cut
• variable pay (e.g. bonus) is decreased

Of the above measures, CEOs tended to prefer the first one: 32% of them have given - or are planning to give - a raise this year to employees earning above the standard minimum wage to avoid a wage tension. Also 32% reported the cancellation of staff recruitment. Almost a quarter (24%) of the surveyed companies are planning to postpone projected investments. 13% of companies chose to decrease variable pay (e.g. bonuses). About one in ten businesses will modify the duties of employees getting a raise, cut employee's benefits, or redirect employees to part-time employment. Job cut was the least common reaction, performed by a meagre 3% of surveyed companies...

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MBET July 2018