Description

The firms' perception is that both their businesses and the overall economy are undergoing a process of adjustment, which will continue in the coming months. Most of them comment that they had already factored this scenario into their business decisions. Accordingly, they estimate that the expected drop in economic activity during 2023 should not cause significant disruptions to their usual operations.

As for the firms' current performance, they report a further deterioration, in a scenario where cost pressures are tending to decrease, although they have yet to relent. Sales prices are slowing down further, due to the perception of weak demand and increased competition in some economic sectors. Persistently high costs and limited slack for further price adjustments have resulted in a further reduction in profit margins.

The firms note that they have made no significant changes in their staffing levels recently but do report a slight decrease in the number of workers operating in their businesses. At the same time, they perceive a somewhat looser labor market, which is reflected in the lower proportion of firms looking for new workers, as well as in the lower difficulty in finding them. At the same time, there has been a slight reduction in wage pressures, both by not fully matching inflation and by offering lower salaries to new workers. All this has resulted in smaller real wage adjustments than was the case six months ago.

In line with this, most firms report that their current staffing level is adequate for the proper performance of their activities. Therefore, they do not need to increase it, but at the same time there have been no major layoffs. It is worth noting that a considerable proportion of firms ─about half─ report operating with fewer employees than before the pandemic. In addition, nearly half of this group believe that this level of staffing is appropriate for the operation of their businesses.

The firms’ perception regarding financial conditions is that they have become less favorable during the last six months, being the increase in interest rates the main reason for this assessment. Even so, the firms note that credit applications have increased slightly in relation to the previous half year, mainly associated with the purchase of inputs and the debt repayments to suppliers.

In terms of expectations, multiple firms expect their performance to continue to worsen over the next twelve months, with their staff tending to decrease slightly. This would occur in a scenario where the firms expect their sales levels to continue to decline, but at a stable pace, while costs would still be high.

About prices, the firms report that they will not make significant increases going forward so as not to weaken demand even more. This is so because they perceive greater pessimism on the part of consumers.

Most companies expect inflation in Chile to be "well above normal" in the next twelve months. The prevalence of this expectation has been progressively decreasing since April of last year, and today it occupies the lowest point in the series.