In November, seasonal factors affected business expectations. There was a slight deterioration in key indicators amid a shorter average lead time for new orders, accelerating inflation, and a growing problem of finding new employees. Labor shortages have once again become a major business problem. This is evidenced by the results of a monthly survey conducted by the Institute for Economic Research and Policy Consulting (IER) in November among 468 industrial enterprises.
Key facts
- The Index of Business Activity Recovery (ІBAR) stopped growing and decreased from 0.23 in October to 0.16 in November, which is only slightly higher than in September. The value of the PMI decreased for all enterprises, regardless of size, and the indicator of microenterprises remained the lowest with a negative value.
- The average lead time for new orders in November dropped from a record high of 7.9 months to 6.7 months as the share of companies working on the fly, i.e. with orders less than a month in advance, increased from 13% to 16%.
- Businesses have no doubt that prices will continue to rise, but the index of expected changes in prices for raw materials and supplies, after reaching a peak in October (0.49), declined last month to the September level of 0.44.
- In the labor market, most companies do not plan any changes, although there are some positive developments: the share of companies planning to increase employment in the next three to four months continued to grow – from 13.8% to 14.1%, and the share of businesses planning to increase the number of employees on forced leave decreased from 14.4% to 4.2%.
- The problem of finding qualified workers is growing, the IER notes. This problem was reported by 55.5% of respondents after 51.9% in October. And unskilled staff is difficult to find for 38.9% of businesses after 34.8% in October.
- Lack of labor due to conscription and/or departure of employees as one of the main obstacles to doing business broke its own record: in November, 64% of businesses complained about this problem, which is higher not only than in October (57%), but also higher than the record figure in August (63%). This problem has once again become No. 1 for businesses.
- The top three obstacles remained the same as in October, although in a different order. The first place was taken by “lack of labor force” with a record 64%. The second place was taken by “dangerous work”. “Rising prices for raw materials, supplies and goods” came in third. The value of this indicator increased from 43% to 48%.
- The survey was conducted on November 18-29, so businesses had time to respond to the resumption of regular Russian attacks on Ukraine’s energy infrastructure in mid-November. As a result, the problem of “interruptions in electricity, water, and heat supply” returned to the list of topical issues, moving from fifth to fourth place and becoming an obstacle for 34% of businesses, compared to 22% in October.
About 500 Ukrainian industrial enterprises located in 21 out of 27 regions of Ukraine take part in the monthly New Monthly Enterprises Survey by the IER. The survey has been conducted on a monthly basis since May 2022. The October survey was conducted with the support of the European Union and the International Renaissance Foundation within the framework of the joint initiative “European Renaissance of Ukraine”.
Source: Forbes
