* Business climate indicator rises to 10 from -7
* Index turns positive for first time in a year
* Business expectations better than current situation
* Climate turns positive in several countries
By Sylvia Westall
VIENNA, Nov 10 (Reuters) - Business sentiment in central and
eastern Europe jumped this autumn, turning positive overall for
the first time in a year, and direct investors were upbeat about
business in the next six months, a survey showed.
The Thomson Reuters & OeKB Central and Eastern European
Business Climate index <REUTERSOEKB> released on Tuesday showed
improved morale in every country surveyed. []
The index jumped to 10 in October, from minus 7 in July. It
was last in positive territory in October 2008. It turned
positive for Croatia, Slovakia, Bulgaria and Serbia and
Montenegro and to zero for Romania.
Poland, the only EU state not to contract during the crisis,
fared best, scoring 25, versus 5 in the previous three months.
IMF bailout recipients Hungary and Ukraine had it the worst,
but the biggest change in views from the previous quarter was
for Hungary, whose business climate score improved to minus 5
from minus 28.
The rise in the overall index adds to improving signs from
other indicators, including last month's Purchasing Managers'
Index which showed manufacturing returning to growth for the
first time in 17 months in the euro zone, central and eastern
Europe's main export destination.[]
Survey panellists see the current business situation much
improved compared with three months ago and their business
expectations for the next six months climbed by 26 points out of
negative territory, to 23 in the quarter.
One third of investors think their business will improve in
the next six months, said Austrian export financing bank OeKB,
which compiles the survey of 400 international companies with
1,400 affiliates in the region.
The outlook for the overall economy has also brightened,
with the index soaring by 42 points to 18.
Some 80 percent of companies surveyed said they were
sticking to their investment plans in the region, 13 percent
said they were thinking of expanding and only 9 percent were
planning to cut operations.
"The direct investors have indicated very early on that the
trough has been reached in Central and Eastern Europe," OeKB
director Angele Eickhoff said.
"It looks like there is a turnaround even if it is still not
clear how sustained this will be," she said.
UTILITIES UP, CONSTRUCTION DOWN
Economists agree the worst is past for the former communist
East, although they say growth is still fuelled mainly by
government stimulus and companies restocking inventories, rather
than a pickup in domestic demand.
With unemployment still on the rise, lending conditions
tight and the prospect of governments having to tackle huge debt
piles accumulated during the crisis, many market watchers expect
the recovery to be marked by years of sluggish growth.
Nearly all business sectors saw an improvement in the
quarter with energy and water companies the most optimistic.
However, the construction sector remained in negative
territory with current conditions slipping to minus 21, a new
low for the survey which began in 2007. Some 40 percent of
respondents in construction said business had been negative in
the quarter.
By country, the biggest sentiment improvements were in
Poland and Hungary on opposite ends of the index. The number of
participants who are upbeat on the Hungarian economic outlook
was slightly higher than those who are pessimistic.
"This careful optimism could suggest a slow recovery of the
Hungarian economy," the OeKB said.
Ukraine, which is heading for an economic contraction of
around 14 percent percent this year, according to a Reuters
poll, was the worst performer on the list. []
NOTE - Distributed exclusively on the Reuters System, the
Thomson Reuters & OeKB Central European Business Climate Index
is based on quarterly surveys of 400 international companies
with regional headquarters in Austria, which manage 1,400
affiliate companies in 19 countries in central and eastern
Europe.
(Editing by Ruth Pitchford)
