Gloom in retail trade major factor as Bulgarian business confidence drops in July 2014

Gloom in retail trade major factor as Bulgarian business confidence drops in July 2014

 

By Clive Leviev-Sawyer

Bulgaria’s business climate indicator fell by 3.2 percentage points month-on-month in July 2014 as managers in major industries lost confidence of what the next six months would hold – and the drop is made more significant as it comes against slight recoveries in business confidence in recent months.

In 2013, business confidence ended the year lower than it began, while throughout remaining well below the average for 2000 to last year. The year saw major political turbulence, as the centre-right government quit early in 2013 amid cost-of-living protests, a caretaker cabinet ran the country for two months, and at the end of May a cabinet seen by many as discredited from the outset took office.

According to Bulgaria’s National Statistical Institute, in July 2014 the overall indicator of business confidence fell, due to the state of the industry, construction, retail trade and services sectors and their expectations for the coming months.

The indicator for industry dropped by 2.1 percentage points in July month-on-month, an indicator affected by expectations that orders would drop and there would be personnel cuts.

The main obstacles to the business’ development in this sector remain the insecure economic environment and insufficient domestic demand, the NSI said.

In Bulgaria’s construction sector, the indicator dropped three per cent, with the sector worried by the insecure economic environment and with managers expecting selling prices to remain unchanged over the next three months.

The retail trade business climate dropped a notable 6.2 percentage points in July from June.

According to the NSI, “the insecure economic environment, the competition in this branch
and the insufficient demand remain the main obstacles to the development of activity in the sector, with the first two factors having a stronger negative effect during this month.”

Retailers expected that selling prices would remain unchanged over the next three months.

The drop in July broke a trend of rising indicators earlier in 2014, although these also were well below the 2000-2014 average and very far from the “boom” years of 2006 to 2008.

In May 2014, Bulgaria’s overall business climate indicator was 4.3 percentage points higher than in April, due to managers’ more favourable opinions in all sectors monitored – industry, construction, retail trade and service sector, according to the National Statistical Institute.

The Bulgarian business climate indicator in March 2014 was 1.2 percentage points higher than in February, the National Statistical Institute (NSI) said on March 28.