In May 2024, Ukrainian business significantly lowered its activity estimates, after two months of positive forecasts. The Business Activity Expectations Index (BPI) fell to 48.0 from 52.3 in April. This indicates a significant deterioration of sentiment among entrepreneurs.

This was reported by the press service of the National Bank of Ukraine.

Deterioration of assessments of enterprise activity is due to several factors: increased intensity of hostilities, shortage of electricity, increase in production costs due to high prices for fuel and logistics, weak investment demand, deterioration of exchange rate expectations, shortage of qualified personnel, uncertainty regarding the further course of hostilities and conditions mobilization of employees.

In the industrial sector, expectations for future performance have deteriorated due to high security risks, rising production costs and power shortages. The sectoral index fell to 48.8 in May from 51.7 in April. Industrialists were less optimistic about the prospects for the volumes of manufactured products and new orders, expecting also a reduction in export orders.

Businesses also lowered their expectations, with the sector index falling to 47.7 in May from 51.8 in April. The reasons were the increase in the price of imported goods, high fuel costs and weak demand. The companies predicted a significant reduction in turnover, smaller purchases of goods for sale and the recovery of the negative dynamics of commodity stocks. Concerns about a decline in trading margins have also increased.

The construction industry, despite favorable weather conditions and stable domestic demand, is pessimistic about future economic results. The index fell to 49.8 in May from 53.4 in April. Expectations for growth in construction volumes and new orders have declined. A stable level of purchases of raw materials and materials is forecast, but against the background of deterioration of the availability estimates of contractors, a significant decrease in the growth of purchases of their services is expected.

Enterprises in the service sector have the most restrained assessment of future results, due to a shortage of qualified personnel, rising logistics costs and weak demand. Their sectoral index fell to 47.2 in May from 53.1 in April. Despite this, they maintain positive assessments regarding the volume of services provided, although they are negative about new orders and volumes of services in the process of execution.

According to the NBU report, high rates of growth in purchase prices are expected to remain high. The majority of respondents predict a slowdown in price/tariff increases for their own products/services.

The situation on the labor market also remains difficult. Only representatives of the construction industry expect a slight increase in the number of employees. Other sectors, due to increased mobilization, predict further reductions in personnel, which will further complicate the business situation.