Monday, February 26

Business confidence cracks under omicron shock

The business confidence levels Facing the first quarter of 2022 They have fallen 2.5% compared to the last three months of the previous year, in what is their first drop since the coronavirus pandemic began. covid-19 and breaks a streak of five consecutive quarters on the rise. This is reflected by the index of harmonized business trust (ICEA) published this Wednesday by the Statistics National Institute (INE), which since the collapse of the second quarter of 2020 -when 26.9% collapsed- had not worsened at any time. Confidence for this first quarter falls in all sectors of activity, but the fall is more pronounced in transport and hospitality with a decrease of 6.9%, followed by that registered in commerce (-3.2%), construction (- 2.8%), industry (-1.6%) and other services (-0.9%).

In the third quarter of 2020 it remained unchanged and since then it had only grown: 10.5% in the fourth quarter of 2020, 3.6% in the first of 2021, 5% in the second, 12.3 % in the third and 1.1% in the fourth. The balance of expectations -that is, the difference between the percentage of entrepreneurs with favorable and unfavorable forecasts- stood at 12.8 negative points, five times worse than the data recorded in the previous three months (2.6 negative points). Specifically, 14.7% of business establishment managers were optimistic for the January-March 2022 period, which is 4.2 points less than in the last quarter. On the contrary, 27.5% declared themselves pessimistic, six points above the previous precedent. The remaining 57.8% had “normal” expectations for this start of the year, 1.8 points below the figure for the previous quarter.

Regarding the opinion of businessmen about how the last three months of last year were, 20.6% said that the results were favorable, compared to 22.6% unfavorable. Thus, the balance was negative 2 points, slightly better than previous expectations (-2.6 points). The fall in confidence also translates into a worsening of their forecasts in terms of employment, since 14.5% of employers believe that it will decrease, practically double that of those who expect incorporations in the workforce (7.3%); 78.2% believe that it will remain stable. The difference between optimists and pessimists reached 7.2 negative points, compared to 4.4 negative points in the previous quarter.

By company size, expectations only increased among managers of companies with more than a thousand employees (+2.9%), in contrast to the decreases in companies with less than ten workers (-3.8%), between 10 and 49 (-2.6%), between 50 and 199 (-2.9%) and between 200 and 999 (-1.5%). Among the 17 autonomous communities, only business confidence increased in Madrid and Aragón, with increases of 3.1 and 2.1%, respectively. At the opposite extreme was Asturias, with a drop of 9.7%, followed by the Balearic Islands (-6.6%), Navarra (-5.6%), Castilla y León (-5.5%), the Valencian Community (-4.6%) and the Canary Islands (-4.1%).

30.1% of managers of business establishments predict that the price level of their business will rise in the first quarter of 2022, while 6.8% estimate that it will fall. The remaining 63.1% consider that it will remain stable. The difference between the percentage of favorable and unfavorable responses stands at 23.3 points, compared to 8.5 the previous quarter.

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7.9% of industrial establishments expect to use less than 40% of their production capacity in the first quarter of 2022, compared to 7.3% in the previous quarter. For their part, 22.1% of industrial establishments expect to use more than 90% of their production capacity in the quarter that is beginning, compared to the 22.5% declared last quarter.

The objective of this survey is to know at a given moment the vision that those responsible for the establishments have about their situation. The ICE survey collects the opinions of the managers of the establishments on the progress of their business for each past quarter and on their expectations for each coming quarter. The methodology is based on the Japanese Tankan index, that is, there is neither weighting nor elevation according to the characteristics of the establishment, since the opinion of each informant counts the same. The survey methodology allows the integration of similar data collected by the Statistical Bodies of the Autonomous Communities, once their homogeneity has been verified, so that they can be incorporated into the general survey process. There are currently agreements signed for this purpose with Andalusia, the Balearic Islands, the Canary Islands, Castilla y León, Catalonia, La Rioja, Extremadura and the Valencian Community.