Despite increase in demand and exports business optimism remains low

Despite the fact that industrial output increased in July by 2.9% compared to June, the business climate indices for August were mixed with manuf acturing and retail sentiment slightly improved but construction falling again, the Central Statistical Office (GUS) reported yesterday. GUS, which every month polls around 3,500 companies from the manufacturing sector, 2,500 construction firms and 4,700 retailers, calculated that there was a percentage point difference between positive and negative answers from polled companies, while the manufacturing index edged up to minus three points from minus six in July. Manufacturers said the outlook for exports is better than for domestic sales and the prospects for higher demand are encouraging them to slightly increase output as stocks continue to fall. However, this may not last as GUS found that future demand forecasts are less optimistic than a month ago. In the next three months, manufacturers are expected to maintain current levels of layoffs and they expect producer prices to increase (Reuters)