BIEC: economic climate brightens in February

2010-03-03



The Leading Indicator (WWK), which provides information on future trends in the economy, improved again in February, this time by 1.7 points to 136.1 points, the Bureau for Investments and Economic Cycles (BIEC) reported. The index has now regained more than 90% of the value lost during the downturn and is back within its long-term trend, the Bureau noted, adding that the condition of the enterprise sector has improved significantly in recent months and that there did not appear to be any major risks for the upward trend to reverse. According to the BIEC, of crucial importance for economic performance going forward will be the rate of recovery in capital investment and banks’ willingness to lend.
The Bureau drew particular attention to continued strong growth in new manufacturing orders (both domestic and export), and a 10-point jump in capacity utilisation, to about 74% from 64% at the low point of the crisis in the spring of 2009. Moreover, the financial situation of enterprises keeps improving. On the other hand, despite advances in the second half of 2009, labour productivity remains below pre-crisis levels, which raises the prospect of more redundancies at many firms, the Bureau reckons.
The WWK is a prognostic instrument. It is a measure of the current state of economic activity and provides advanced information on upturns and downturns in economic activity in relation to GDP as well as data on production, retail sales, wages and household incomes. The average prognostic timeframe of the WWK index in relation to the actual state of economic affairs ranges from 3 to 12 months, depending on the phase of the economic cycle.