Brief Overview:
- The Business Activity Recovery Index moved away from zero, rising to 0.03.
- Meanwhile, 84.3% of businesses do not predict significant changes in production over the next two years.
- Capacity utilization has reached a new low, with the average duration of the new order portfolio shrinking to 3.4 months.
- The share of positive assessments of the government's economic policy has remained unchanged for four consecutive months at 4%, while neutral assessments reached a yearly high of 68%.
The recovery remains fragile: short-term improvements in business performance indicators are not translating into stable expectations due to rising long-term uncertainty. These are the findings of the 44th Monthly Survey of 485 industrial enterprises, conducted by the Institute for Economic Research and Policy Consulting (IER) from December 18 to 31.
The Business Activity Recovery Index (BARI) rebounded from zero in November, returning to the October level of 0.03. BARI values improved across all enterprise categories, although it remains negative for micro-enterprises.
The Business Activity Recovery Index slightly improved
Capacity utilization has slightly improved compared to "pre-war levels." The share of enterprises operating at full capacity remained at 5%, while the share of those operating at 75–99% capacity increased by 3 percentage points to 60%. This shift occurred as the share of companies with 50–74% utilization decreased by 4 percentage points to 19%.
“Now” vs. “before February 24”: capacity utilization has increased slightly
The Aggregate Industry Outlook Index (AIOI) decreased slightly to 0.07 in December from 0.08 in November, driven by a decline in production expectations and finished goods inventories.
Uncertainty in the three-month perspective did not change significantly, and for exports, it even decreased from 24.1% to 23.7%. In the six-month perspective, uncertainty is moving in opposite directions: regarding the financial and economic situation of enterprises, it decreased from 27.2% to 26.6%, while regarding the overall economic environment in the country, it rose from 29.7% to 32.2%.
"Uncertainty in the long-term perspective, unfortunately, continues to grow. The share of businesses that do not know what will happen in two years is increasing—it has reached 48.2%, up from 43.7% in November. After a period of calm between mid-2024 and July 2025, we are witnessing a rise in uncertainty," said Oksana Kuziakiv, Executive Director of the IER.
Uncertainty in the long term has increased
“It is hard to predict what will be with the activities of our enterprise in 2 years”, % of answers
Among those who could form expectations, 84.3% do not predict significant changes in production. At the same time, the share of those planning to reduce production increased to 3.7%, while the share of those planning expansion decreased to 12%.
Contradictory trends persist in production: a simultaneous improvement in current results alongside a gradual deterioration in expectations. In December, the share of enterprises that increased production volumes rose from 20.2% to 27.7%. Conversely, the share of those planning to increase production in the next 3–4 months fell from 34.8% to 29.2%.
"Individual sectors demonstrate different trends. In mechanical engineering, expectations have slightly improved, but performance indicators remain below zero. In the woodworking industry, both expectations and the real-world situation have been moving in the same direction over the last two to three months. The construction materials sector is a particularly interesting case: between August and September 2025, performance indicators dropped sharply and continue to decline, while expectations have moved upward. The food industry shows basic resilience: production is growing, even though expectations have worsened," noted Oksana Kuziakiv.
The share of enterprises reporting growth in current exports rose to 28.6% from 21.2% in November. However, expectations have dimmed: only 34.5% of enterprises predict export growth in the coming months, down from 37.6% in November. A convergence of expectations and current results is also observed for sales and new orders.
New orders portfolio
"In new orders, we see a 'clear' downward trend. On average, enterprises are secured with new orders for 3.4 months, compared to 3.6 months in November. Enterprises are not yet working 'off the wheels' (hand-to-mouth), but they are getting close," said Oksana Kuziakiv. The share of those working "off the wheels" rose from 29% to 30%, while the share of enterprises with orders for 1–2 months remained stable at 29%. For instance, only 7% of companies in December had orders scheduled for more than a year.
Inflationary pressure is showing conflicting signals. Fewer enterprises (down from 36% to 33.9%) reported price increases for raw materials and supplies, yet more enterprises (up from 44.9% to 48.3%) expect prices to rise. A similar pattern is seen in finished goods prices: fewer businesses—33.9%—recorded price increases, while more businesses—45.9%—expect price hikes in the three-month perspective.
Assessments of the government's economic policy remain predominantly neutral, with this share increasing from 65% to 68%. At the same time, the share of enterprises rating the government's policy negatively decreased by 4 percentage points in December to 20%. The share of positive assessments has remained unchanged for four consecutive months at 4%.
The New Monthly Enterprises Survey (#NRES) by the IER involves up to 500 Ukrainian industrial enterprises located in 21 of the 27 regions of Ukraine. The survey has been conducted monthly since May 2022 as part of the project "Ukraine's Integration into the EU: A Dialogue Built on Facts," supported by the International Renaissance Foundation.
Video presentation of the December survey results (Ukrainian):https://www.youtube.com/watch?v=Gau2b1e-pms
All previous surveys since July 2022:
http://www.ier.com.ua/en/proekt_dilova_dumka/NRES_Presentations
