In July 2009, the total business climate indicator decreased by 1.2 percentage points from June due to a negative development of the business conjuncture in industry and retail trade, the National Statistical Institute said on Tuesday. Variations in the positive direction of the business climate indicators were registered in the construction and services sectors in July.

In July, the composite business climate indicator in industry decreased by 4.3 percentage points from June, down to its lowest value since this indicator began worsening. The decrease was due both to lowered managers' evaluations of the present business situation and to more pessimistic expectations about the next six months.

The July business climate poll found decreased production activity of industrial enterprises, but the rate of decrease was lower than in the previous months. The order book of industrial enterprses (measured in number of months) dropped from 5.0 in April to 4.4 months in July. In 2008 the average order book was 5.9 months long. The average capacity utilization in industry continued to decrease, reaching 63.9 per cent in July. Its 2008 average was 74.9 per cent.

The competitive position of enterprises both on the domestic and foreign markets (inside and outside the EU) worsened compared to the situation three months ago.

In July 2009, the composite business climate indicator in construction rose by 2.4 percentage points from June because of a 6.5 per cent improvement of managers' expectations about the business situation during the next six months. This optimism was prompted by expectations of preservation of the present (already decreased) construction activity over the next three months rather than by expectations of an increase. In July the business poll found a shortening of the order book of construction enterprises and an increase in the number of customers delaying payments.

In both construction and industry, the enterprises expecting a price decline outnumbered those believing that their prices will rise over the next months.

The composite business climate indicator in retail trade dropped 1.5 percentage points in July 2009 from June due to managers' more moderate opinions regarding the present and expected business situation of their enterprises during the next six months. The volume of sales continued to contract.

The negative impact of the insufficient demand and the competition in retail trade intensified in July. Selling prices were expected to retain their level during the next three months.

In July 2009, the composite business climate indicator in the services sector rose by 1.6 percentage points from June due to managers' relatively improved assessments of the present business situation, i.e. fewer enterprises found that the situation had worsened. The same applies to the relatively more favourable evaluations of the demand for services over the last three months, i.e. fewer entrepreneurs pointed out that demand had shrunk. Expectations about the business situation during the next six months as well as about the demand for services over the next three months worsened to a certain extent.

Just as in June, in July selling prices in the services sector were expected to drop over the next three months.