- The Business Activity Recovery Index fell to 0.03 in October, a result of a sharp deterioration in the situation for large enterprises and small businesses.
- For the first time since June 2024, the share of companies operating at full capacity has halved — from 13% to 6%.
- Exports are showing a sharp decline: the index of change fell to -0.02 due to an increase in the share of exporters recording a drop (21%).
Uncertainty about the future of business in two years is growing at a record pace, with the share of those unable to provide a forecast rising to 43% in October.
Business sentiment in Ukraine remains very fragile. Despite a slight improvement in long-term expectations, short-term forecasts and enterprise performance indicators are worsening. Growing uncertainty, a slowdown in recovery, staff shortages, security problems, and increased attacks on transport infrastructure continue to be key constraints on business activity.
This is evidenced by the results of the 42nd monthly survey, which the IER conducted from October 22 to 31 among 465 industrial enterprises.
The Business Activity Recovery Index (BARI) is gradually worsening – the indicator has again decreased from 0.05 to 0.03.
"The deterioration of the overall indicator was due to a rather significant worsening of this indicator for large enterprises. For small businesses, the trend has been downward since May, and the indicator has entered the 'minus' zone, just like for micro-businesses, which have been in the 'minus' for quite some time. Medium-sized enterprises saw a slight rebound. Overall, these signals are not very positive," said Oksana Kuziakiv, Executive Director of the IER.
For the first time since June 2024, there has been a significant reduction in the share of enterprises operating at full capacity – from 13% to 6%. They have likely moved into the group of those working at 75–99% capacity: their share in October increased from 52% to 59%.
The aggregate indicator of industrial prospects, which measures immediate plans and changes in business, decreased from 0.12 to 0.11, reflecting a worsening of short-term production expectations.
The situation in exports is different: the index of change significantly decreased from +0.19 to -0.02 for the first time since the beginning of 2024 – due to an increase in the share of those recording a drop in exports (to 21%) and a decrease in the share of those with export growth (to 15%).
Medium-term uncertainty has increased both regarding the financial and economic situation at enterprises – from 16.2% to 20% – and the general economic environment – from 17.3% to 22.6%.
"At the same time, with long-term expectations, we see a clear trend. July was a turning point, from which the share of those who could not answer the question of what will happen to their enterprise and its business activity in two years is gradually growing. If we compare with July, the indicator increased from 31.4% to 38.7% in September and 43.2% in October," said Oksana Kuziakiv.
The pace of year-on-year recovery continues to slow down. The share of entrepreneurs who do not expect significant changes in production within two years has slightly decreased from 85.5% to 85.1%. At the same time, the share of those planning to expand production has increased (from 11.2% to 12.7%), while the share of those expecting a reduction has decreased (from 3.2% to 2.2%).
"The financial and economic situation at the enterprise in the six-month perspective shows an unexpected decrease in optimism by almost 10 percentage points – from 0.28 to 0.19. We recorded such a significant drop in May-June 2024," noted Oksana Kuziakiv. The general economic environment in the country has worsened even more – from 0.28 to 0.16.
Enterprise performance indicators and short-term expectations are worsening: sales and new orders indices are declining. "The order term is smoothly shortening. Now it is an average of 4.1 months after 4.3 months in September. There was an increase in the share of those who have orders for 12 months or more – from 7% to 10%, as well as those who have no orders or have orders for only one or two months," said Oksana Kuziakiv.
Industries focused on the domestic market, especially the food industry, demonstrate strong resilience. In contrast, export-dependent sectors (metallurgy and woodworking) remain vulnerable to logistical and security risks. "In long-term expectations, the volatility in metalworking and the woodworking industry is greater than in the food industry," stated Oksana Kuziakiv.
Inflationary pressure remains high. In October, 46.8% of enterprises expected a further increase in prices for raw materials (in September – 47.9%), and 46% – an increase in prices for finished products (in September – 45.6%).
In the next 3-4 months, only 16.6% of companies plan to increase employment. The share of companies planning to reduce staff has also increased – from 6.6% to 8.3%.
The New Monthly Enterprises Survey (#NRES) from the IER involves up to 500 Ukrainian industrial enterprises located in 21 of Ukraine's 27 regions. The survey has been conducted monthly since May 2022.
Video presentation of the October survey results –https://www.youtube.com/watch?v=Tdu08mnUb6g
All previous surveys since July 2022http://www.ier.com.ua/ua/proekt_dilova_dumka/NRES_Presentations
