ESTAT business climate index

Despite some slight volatility in the individual components of the index, since mid-2006 there is a sustainable trend towards the improvement of the business environment and the condition of the companies in the country. The financial services, real estate operations and, notably, the developing activities in the areas of education, healthcare and social services, are the sectors that boast the greatest number of companies in “good health”. Other indicators also show some "stir" in this quite stagnated and underestimated over the years sector.

The study has registered a general and significant growth in the evaluation of companies’ resources, with some companies reaching record values for the period in which the survey has been implemented. These statements hold true to the greatest extent with regard to internet connectivity, whose average rating has increased by 0.20 percentage points to the exceptional 5.21 in just three months. At the same time, the number of companies that are not connected to internet continues to decrease. At the time of the study, only 13 percent of the companies in the sample fell in this category.

An EUROCHAMBRES (the Association of European Chambers of Commerce) survey ranks Bulgaria fifth by business climate condition out of the 27 EU member states.

2007 data by the National Statistical Institute (NSI) indicate that the business environment has remained favorable in September. The general business climate indicator (GBCI) has dropped by 1.4 percentage points compared to August, due to the more moderate opinions expressed by the managers in all industries monitored by business surveys. GBCI is a weighted mean of four sectoral business climate indicators: industrial production, construction, retail trade, and services. The surveys are held by NSI and the possible answers are based on a three-grade scale: “increase”, “without change”, “reduction” or “above normal”, “normal”, “below normal”. The assessment balances are calculated as the difference between the relative shares of the extreme options. The business climate indicator is a mean geometrical value of the assessment balances for the current situation in the enterprises and the expectations for the next six months.

Industrial production. In September, this component indicator has preserved its value from the preceding month. The managers are optimistic with regard to the current business condition of the industrial enterprises, which they expect to remain unchanged over the next six-month period (57.4% of the enterprises) or to improve (40.4%). At the same time, the availability of orders, especially from foreign clients, is worsening, despite the fact that production is evaluated as unchanged over the previous month.
        Almost a quarter of the industrial enterprises project an increase in the selling prices over the next three months.

Construction. The business situation in the construction sector has remained favorable in September, 2007, despite the fact that the business climate component indicator has lost 3 points from its August level. This is due to the more moderate assessments and expectations of the managers with regard to the business condition of the construction enterprises. Their assessment of the current construction activity is more optimistic, and the number of orders has also improved over the past month. The entrepreneurs expect that the development of their activities will remain unchanged over the next three months.
        The competition, workforce shortage and financial problems continue to be the greatest hindrances to the activities of the companies; the negative influence of the materials’ prices factor has also increased in September.
        In terms of the selling prices in the construction business, one-third of the entrepreneurs expect these to increase in the next months.

Retail trade. The business climate in retail trade component indicator has lost 0.7 points compared to its August level, which is due only to the moderate expectations of the managers with regard to the condition of the enterprises in the next six months. A similar shift of opinion is also seen with regard to the expectations for the volume of orders to suppliers in the next three months.
            The retail traders are still expecting the selling prices to increase.

Services (excluding commerce). In September, 2007, the business climate in the service sector component indicator was 3.1 points below its value in the preceding month. This decrease is due to a shift in managers’ expectations and assessment of their companies, from “better” towards “unchanged”. In their opinion, the current demand for services is improving and they expect it to remain unchanged over the next three months.
            In terms of the selling prices, 73.9% of the enterprises in the sector expect them to remin unchanged in the next three months.

Source: NSI, www.nsi.bg