BUSINESS CLIMATE DETERIORATES AT THE START OF THE YEAR

Business climate deteriorated in January after a slight improvement the previous month. In the first month of the year, the overall business climate indicator fell by 3.2 points from its December reading, largely due to the worsening situation in manufacturing and retail, showed the regular monthly survey among managers by the National Statistical Institute (NSI). The business environment measure for manufacturing fell 1.9 points reflecting a more moderate managers' assessment of current business. The regular NSI poll points to a slowdown of manufacturing activity and factory orders. The average capacity utilization rate was 71.4% in January, which heralds overcapacity in light of the far from promising outlook for demand in the coming months.

Still, managers are reasonably optimistic about business developments in the next three to six months despite current difficulties. The business climate indicator in construction remained unchanged from its December level. The retail sector recorded a drop of more than 12 points in January because of gloomier executive sentiment. expectations for sales and supply orders in the next three months are subdued amid economic uncertainty and weak demand. The business climate index in services was little changed from its December level.