Pessimism among entrepreneurs in the evaluation of the economy significantly rose again in June, mostly in industry and services

In June 2022, confidence in the economy has been fluctuating again, decreasing by double digits in services and industry, in construction only slightly. Consumers have become increasingly concerned about the general economic situation.

Entrepreneurs' confidence in the development of the economy in Slovakia deteriorated again month-on-month in June 2022, after a three-month rise in optimism. Confidence decreased faster, especially in services and industry, with pessimistic evaluations prevailing in the core industries. Confidence in construction also declined slightly. Although trade remained optimistic last month, concerns are associated with price developments. The increase in pessimism was also reflected among the consumers in the evaluation of the economic situation in the country or the financial situation of households, the level of confidence is among the lowest in the last year.

The economic sentiment is measured by five sub-indicators, expressing the expectations and confidence of entrepreneurs in four sectors (industry, construction, trade and services) and consumers. The sub-indicators range from -100 points (maximum pessimistic answers) to +100 points (maximum optimistic answers).

The sentiment in the industry deteriorated significantly in June after improvement in the previous months. The confidence indicator (seasonally adjusted) dropped by 11.3 percentage points (p.p.) to -1.3. The development of the indicator was adversely affected especially by the decline in orders, especially in manufacture of computers, electronic and optical products, and the decline in the expected production in the key car manufacturing.

After two months of growth, the confidence indicator in services also recorded a more dynamic decline, falling by 14.3 p.p. in June to level 19. The evaluation deteriorated in all three components, in the evaluation of the current economic situation over the last three months also in the evaluation of the current or short-term expected demand for services. Pessimism has increased most markedly in the arts, entertainment and recreation, as well as in the information and communication sector. The highest increase in pessimism in the evaluation of demand for services in the next three months was in financial and insurance services.

In June, the consumer atmosphere in Slovakia deteriorated for the second consecutive month. Compared to the previous month, the consumer confidence indicator (seasonally adjusted) decreased by 3.2 points to -27.8. Concerns about the expected general economic situation increased the most, but expectations of unemployment, household savings and the expected financial situation of respondents' households also deteriorated.

In June, confidence in trade remained at the level of the previous month, the confidence indicator remained at 29. Respondents positively evaluated business activities in recent months, but confidence in their development deteriorated over the next three months. Pessimism has also risen in the expected increase in commodity prices, in the evaluation of which the concerns doubled compared with the end of the 2021.

After last month's growth, the seasonally adjusted confidence indicator in construction dropped again in June. The decrease by 4.5 points to -14 was mainly influenced by more unfavorable assessments of the expected employment.