· The statistical offices of  the former components of Czechoslovakia--the Czech and Slovak Republics released data on business and consumer confidence this morning. Each country produces measures of consumer and industrial confidence and a composite measure of confidence.   

· The Composite Indicator for Czech Republic is a weighted average of seasonally adjusted confidence indicators for industry, construction, trade and of the consumer expressed in terms of percent balances. The Slovak Economic Sentiment Indicator, expressed in terms of an index with base 2000=100), is composed of the industrial confidence indicator (40%), the construction confidence indicator (20%), the retail trade confidence indicator (20%) and the consumer confidence indicator (20%).  It is not possible to compare the degree of overall confidence in the two countries, since one measure is expressed in index form and the other a percent balance, but trends in the two measures can be compared. The trend in the Slovak Economic Sentiment Index has shown a marked improvement since early 2004.  In November the index was up 2.37% from October and 4.06% from November, 2004. The trend in the composite measure of confidence for the Czech Republic was down after a big improvement in early 2004 but has begun to improve since August of this year. The percent balance in November was unchanged from October when it stood at 8 and was 2 percentage points above November, 2004. The trends in the two composite measures are shown in the first chart.

· Since measures of consumer and business in both countries are expressed in terms of percent balances it is possible to compare the degree of consumer and industrial confidence in the countries. The fact that the percent balance in consumer confidence in the Czech Republic was 0 in November while that in Slovakia was -14.6 suggests that there are more pessimistic consumers than optimistic ones in Slovakia in November than in the Czech Republic.  This has been true over the past five years and can be seen in the second chart.

· Although the Slovak economy has been increasing faster than that of the Czech Republic, business confidence is moderately below that of the Czech Republic.  In November the excess of business optimists over pessimists was 6.7% compared with 3.0% in October and 8.7% a year ago.  The corresponding figures for the Czech Republic were 10%, 11% and 10%.  The third chart comparing the percent balances in business confidence in the two countries shows some improvement in recent months.