Most business sectors in Ukraine expect staff reductions - NBU

Ukrainian business in September remained restrained in its activity assessments, and enterprises in most sectors expected a reduction in the number of employees. The most pessimistic staffing expectations were recorded in the service sector.

This is evidenced by the results of the monthly survey by the National Bank of Ukraine.

The Business Activity Expectations Index (IODA) in September was 48.2 points, compared to 48.3 in August and 50.4 in September last year. A value below 50 points indicates a predominance of restrained assessments among surveyed enterprises.

Among the main factors that pressured business, the NBU cited the deteriorating security situation, destruction of logistics, production and storage facilities, rising fuel prices, limited domestic supply of goods and services, shortage of qualified personnel and slightly stronger exchange rate expectations.

At the same time, more stable energy supply, high harvest and development of new logistics routes had a positive impact on business sentiment.

Industrial enterprises assessed the situation best in September. Their sectoral index rose to 51.0 points from 47.3 in August. Enterprises expected an increase in production and new orders, including export orders.

The construction sector, on the contrary, after six months of positive assessments, dropped below the neutral level. The index fell from 50.7 to 48.8 points. Among the reasons were the suspension of state funding for road and infrastructure restoration, seasonality and rising costs.

The weakest assessments among all sectors were recorded in trade – 45.9 points versus 47.5 in August. Trade companies expected a further decrease in turnover, purchases of goods and inventories, as well as a decline in trade margins. The NBU attributes this, in part, to the destruction of warehouse complexes and expensive, complex logistics.

In the service sector, the index fell to 47.3 points from 49.5 a month earlier. Companies expected a decrease in new orders, and among the problems cited the destruction of logistics and warehouse infrastructure, more expensive fuel and shortage of qualified workers.

Staffing expectations also worsened. Enterprises in industry, trade and services were inclined to reduce personnel, with service sector companies being the most negative. Only builders expected an increase in the number of employees.

In addition, most surveyed companies forecast an acceleration in the growth of purchase prices for raw materials and supplies, as well as prices and tariffs for their own products and services.

The survey was conducted from September 3 to 22 among 588 enterprises. The NBU emphasizes that its results reflect the assessments of company managers, not the forecast of the regulator itself.

Based on materials from: National Bank of Ukraine