Private consumption grows business confidence

Private consumption grows business confidence

The confidence of Aragonese businessmen grows. The latest Business Confidence Indicator (ICE) reflects a slight advance, standing at 1.2 points in the fourth quarter of 2023 compared to 0.4 in the previous quarter.

This advance in the Business Confidence Indicator is mainly due to the better general assessment of entrepreneurs in the tertiary sector as a consequence of the increase in private consumption.

However, the opinion of businessmen in the industry and construction sector worsens due to the difficulty of continuing to grow due to the lack of demand, although confidence still remains at positive levels in these fields, according to the ICE prepared by the Basilio Paraíso Foundation of the Chamber of Commerce of Zaragoza and Ibercaja. Within a context of uncertainty, Aragonese businessmen also value the completed quarter more positively than the upcoming one.

Going into detail, Situation and Expectations sub-indicators improve. Specifically, the first stands at 4.2 points, that is, four tenths above the previous figure. For its part, Expectations remains negative with a value of 1.8 points. However, an improvement is observed compared to the negative figure of 3 from the previous quarter.

Delving deeper into the sectors, it is observed that the ICE in the industrial and construction sector in Aragon falls one point, reaching a negative value of 2.2 points in the fourth quarter. A figure with which the sector is, for the second consecutive quarter, in negative territory due to the slowdown in expectations for the industry. In the previous quarter of 2023, it stood at a negative value of 1.1.

In commerce and services, there was an increase of two and a half points, reaching 4.1 points compared to 1.6 in the previous quarter. In these sectors, business prospects for the first quarter of 2024 are maintained due to the greater strength of domestic demand and the limited impact of the tightening of credit conditions on current household consumption.

Business Outlook

The ICE also includes companies’ forecasts for the first quarter of 2024. 39.9% of companies believe that their turnover will remain stablewhile 30.3% expect it to increase and 29.8% point to a slight fall.

As for the employment, only 12% believe that it will increase in their company, although the majority, around 62.8%, indicate that it will remain the same. A notable 13.4% consider that it will decrease.

In relation to the investment, the majority plans to maintain it. This is the case of 58.8% compared to 14.8% who point to an increase and 19.4% who believe it will decrease. Regarding other variables such as late payment and the indebtednessmost companies indicate that they will remain at the same levels, that is, they will remain the same.

The limits of business growth

Among the main factors alleged by companies to slow down the growth of turnover is the insufficient demand and lack of qualified labor. 70% of companies point to these two factors, although in the case of the secondary sector it increases to 80%.

Specifically, the lack of demand is pointed out by 53%, being the main limiting factor of growth, followed by labor with 15.7% and increased competition and financial difficulties with 6.5% in both cases.

Also notable is the 5.2% that indicates the administrative transactionsas well as the productive capacity which is an important factor for the 3.9%. However, there is also 7.8% that point to other causes.


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