Business sentiment worsens: expectations of price increases and workforce reductions

Ukrainian business has negatively assessed its current performance for the second consecutive month. The Business Activity Expectations Index decreased to 43.6 points in June (compared to 48.0 in May).

This information was reported by NBU survey.

According to the NBU, uncertainty about the duration of the war, increased business costs due to electricity shortages from Russian attacks on the energy system and tariff hikes, weak investment demand, and deteriorating exchange rate expectations have weakened economic activity.

Business sentiment is deteriorating: expectations include rising prices and workforce reductions.

Additionally, adverse trends in the labor market due to unresolved issues arising from mobilization processes and a significant shortage of qualified workers have further worsened expectations across all sectors.

Businesses in industry, trade, and service sectors anticipate accelerated growth in procurement prices and prices/tariffs for their own products/services, whereas construction respondents expect a slight slowdown.

Employment outlooks have worsened. Managers across all sectors anticipate a decrease in overall workforce, with the most significant impact expected in the service sector, as reported by the NBU.

The monthly survey of enterprises was conducted from June 4 to June 21, 2024. A total of 445 enterprises participated in the survey. The survey results reflect the opinions of respondents—business managers—and not the assessments of the National Bank of Ukraine. A neutral Business Activity Expectations Index value is 50 points.