Compared to last month, all four sub-indices of the household prosperity index have slightly declined. The employment index has decreased by just 0.2 points, from 4.6 to 4.4, which means that despite the war, the perception of the labour market is rather positive. The already poor perception of inflation has been the most adversely affected by the war, the index of which has fallen from -81.2 to -83.6. The perception of the economic environment has changed from -19.9 to -21.6, while that of the financial situation from -11.2 to -13.3.
The sense of prosperity is still determined by war and sanctions
According to the June 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the population and businesses has declined. Compared to the previous month, the rate of change has now been bigger for companies, meaning that business leaders are also beginning to feel the effects of war and sanctions. This is mainly reflected in the case of households, while rising energy prices, weak forint exchange rate, and the fragmentation of supply chains are a problem for businesses. On a scale between -100 and +100, the value of prosperity index decreased from -13.3 to -14.7 regarding households, while it decreased from -8.7 to -14.0 regarding businesses. The end of war and the elimination of the risk associated with sanctions, which are harmful to the economy, as well as the strengthening of the forint, thus normalising inflation, are required to improve the sense of prosperity.
While in last month’s survey the perception of the economic situation for the next 12 months became the most unfavourable, now the biggest change has taken place in the perception of the economic situation of the last 12 months. The proportion of those who think that the economic situation has significantly deteriorated in the last 12 months has increased from 33.4 percent to 36.0 percent, while that of those who think it has slightly deteriorated has increased from 21.9 percent to 24.5 percent. The proportion of those who think that the situation is unchanged has decreased by 0.9 percentage point, to 13.9 percent, and that of those who think that there has been a slight improvement has increased from 15.9 percent to 17.4 percent, while significant improvement has been experienced by 6.4 percent compared to last month’s 10.8 percent.
Compared to the previous month, fear of losing a job has changed in a positive direction. The proportion of those who are not at all afraid of losing their job in the next 6 months has risen from 54.1 percent to 56.2 percent, while that of those who have chosen the option of rather not afraid has risen from 18.7 percent to 19.6 percent. The proportion of those who are rather afraid that they or any of their family member will lose their job is 12.7 percent (16.6 percent in May), while that of those who are very much afraid is 9.7 percent (9.2 in May).
Regarding the corporate survey, all four sub-indices have become more unfavourable compared to last month. The sub-index of the economic environment has fallen from -22.0 to -28.8, making it the lowest of the four sub-indices. The perception of the sectoral and production environment is at a similar level: the former has changed from -4.5 to -8.9, while the latter has changed from -4.5 to -9.0. The perception of the business environment has changed from -12.1 to -19.8.
Like in the case of households, the biggest change has taken place in the perception of the economic situation in the last 12 months in the case of businesses as well. The proportion of those choosing the option of significantly deteriorated has increased from 27.0 percent to 32.8 percent, while that of those choosing the option of slightly deteriorated has increased from 33.2 percent to 35.9 percent. Compared to last month’s 13.5 percent, 11.2 percent think that the economic situation has not changed, 14.3 percent has experienced a slight improvement compared to last month’s 17.1 percent, while the proportion of those who have experienced a significant improvement is 4.2 percent instead of 7.0 percent.
The perception of the business environment has also become negative: the proportion of those who expect a significant deterioration in the business environment has increased from 11.5 percent to 13.7 percent, while that of those who expect a slight deterioration has increased from 27.5 percent to 34.4 percent. The proportion of those who expect an unchanged situation has fallen from 23.0 percent to 19.0 percent, while that of those who expect a significant improvement has fallen from 3.1 percent to 1.8 percent.
About the prosperity index
The task of the prosperity research conducted by the Századvég Konjunktúrakutató Zrt. 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 perception 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 households and companies perceive the processes in the economy. 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.