According to the November 2021 survey of Századvég Economic Research Institute, the sense of prosperity of households and businesses has become more unfavourable after the improvement of the previous months. The value of the prosperity index on a scale between -100 and +100, fell from -1.5 to -6.8 for the population, and from -0.2 to -2.6 for companies. For both cases, the rise of the fourth wave of the coronavirus and inflation played a role in the decline. For companies, rising energy prices on the world market are a problem due to rising production costs.
Economic expectations have been reduced by the fourth wave of the pandemic and international economic disruption
All four sub-indices of the household prosperity index decreased in November: the lowest value is still characterised by inflation, the sub-index of which fell from -36.3 to -41.2. This has been the worst value since the start of the survey in August 2019 and is in line with the acceleration of inflation worldwide. The perception of employment is still the most favourable, but the value of the indicator has decreased here as well, from +9.2 to +4.6. The perception of the financial situation fell from -4.3 to -8.5. The sub-index for the perception of the economic situation fell from -1.4 to -9.1. For the last three sub-indices, the decrease is due to the evolution of the virus situation.
Of certain questions in the population survey, the biggest change was characteristic to the questions about the development of the economic situation regarding the past 12 months and the next 12 months. The extent of deterioration was greater in the case of the question about the future. Regarding the past 12 months, compared to 19.8 percent in October, in November 25.3 percent said that the economic situation had significantly worsened, while the proportion experiencing a slight deterioration barely changed, from 24.4 percent in the previous month to 24.0 percent. The change was also negligible (from 15.6 percent to 16.0 percent) for those who experienced an unchanged economic situation. In contrast, the proportion reporting a slight improvement in the economic situation fell from 22.7 percent to 18.4 percent, while those reporting a significant improvement fell from 14.7 percent to 12.1 percent.
Compared to 7.6 percent in the previous month, 13.4 percent expect a significant deterioration in the economic situation, while 15.1 percent expect a slight deterioration compared to 13.4 percent. The share of those who expect the same economic situation rose slightly, from 21.2 percent to 23.1 percent. In contrast, regarding those who expect a slight improvement in the economic situation, there is a significant decrease: their share has fallen from 33.0 percent to 24.5 percent. The proportion of those who expect a significant improvement barely changed, from 10.9 percent in the previous month to 10.1 percent. Thus, it can be stated that households have a somewhat more positive view to the future than to the past.
In the corporate survey, the values of the four sub-indices decreased in November: the perception of the industry environment remained the most favourable, with the indicator showing a decrease from 14.7 to 12.3. The biggest decrease, in line with the deterioration of the virus situation, was also in the perception of the economic situation, from +2.4 to -5.5. The perception of the production environment hardly changed; it was -4.1 compared to -4.9 in the previous month.
As in the case of the population survey, the biggest change occurred in the perception of the economic processes regarding the past 12 months and the next 12 months, but here the extent of the deterioration was similar. Compared to 14.2 percent in October, 18.1 percent perceived the economic performance of the past year significantly deteriorating, while 28.1 percent perceived it slightly deteriorating compared to 23.9 percent in the previous month. The proportion of those experiencing the same economic situation hardly changed, it was 16.4 percent compared to 17.2 percent in the previous month. At the same time, the proportion of those reporting a small or significant improvement fell from 27.9 percent to 24.9 percent and from 13.9 percent to 9.7 percent, respectively.
Regarding the next twelve months, 10.7 percent expect a significant deterioration compared to 8.3 percent in the previous month, while 14.6 percent expect a slight deterioration compared to 14.6 percent in the previous month. In this case, there is no significant difference in the proportion of those expecting an unchanged economic situation either: it was 22.5 percent compared to 23.6 percent in the previous month. A slight improvement is expected by 31.9 percent compared to 33.6 percent in October, while significant improvement is expected by 10.5 percent compared to 5.7 percent in the previous month. The negative change in the perception of the past and expected economic situation can be explained by the supply difficulties affecting the industry (shortage of raw materials, rise in energy prices), as the prosperity index has worsened the most in the industry, regarding the sectors. Like the population, businesses also have a slightly positive view on the economic developments for the next twelve months compared to the past twelve months.
About the prosperity index
The task of the prosperity research conducted by the Századvég Economic Research Institute is to provide decision makers and analysts with information about the current and expected processes of the economy in the near future. Our institute has been compiling corporate and household prosperity indices on a monthly basis since August 2019. In our monthly survey, we ask 1,000 company executives and 1,000 adult residents about their assessment of the economic situation and their expectations thereof. Regarding the two groups, we ask 29 and 28 questions, respectively, which cover a wide range of economic life. Of the responses, positive ones (e.g., expected improvement in the economic situation) receive positive scores, while negative ones (expected decline in employment) receive negative scores. Then, by averaging the scores and converting them to a scale between -100 and +100, the prosperity indices are obtained. Thus, the higher the value of the prosperity indices, the more favourable the processes in the economy are for households and companies. In addition, regarding both household and corporate surveys, we also prepare 4 sub-indices for each by using some of the questions, which illustrate the development of economic well-being in an area.