Business Activity Recovery Index Rises for Second Consecutive Month but Remains Negative – IER Survey

• The Business Activity Recovery Index improved in July, although it remained negative at -0.11.
• Among businesses able to assess their prospects two years ahead, 86.9% do not plan any changes.
• The share of businesses operating at full or near-full capacity increased from 63% to 64%.
• The average order backlog rose from 2.8 to 2.9 months.
• Businesses expect a slight increase in prices over the next 3–4 months.

The Business Activity Recovery Index (BARI) has improved for the second consecutive month, although it remains negative at -0.11, up from -0.14 in June. This means that more businesses reported a deterioration in business activity compared with the previous year than an improvement.

The improvement was mainly driven by a decline in the share of businesses reporting weaker activity than a year ago. At the same time, the shares of businesses reporting improved activity or no change increased only slightly.

These are the findings of the 51st monthly survey conducted by the Institute for Economic Research and Policy Consulting (IER) in July among 472 industrial enterprises.

The BARI remains lowest for micro-enterprises, at -0.20, but improved significantly and is now close to the levels recorded by small (-0.15) and medium-sized (-0.10) enterprises. Large businesses continue to report the highest BARI, at 0.00.

Against the backdrop of intensified Russian attacks on logistics and critical infrastructure, Ukrainian businesses continued to recover, although high uncertainty continued to make companies cautious about their future plans.

“The survey was conducted in the final ten days of July, when Russian strikes on areas far from the frontline continued to escalate, causing significant damage to warehouses and other business infrastructure. However, we are not seeing a direct impact yet. The consequences of these attacks will likely be reflected in the next monthly surveys,” said Oksana Kuziakiv, Executive Director of the Institute for Economic Research and Policy Consulting (IER).

In July, capacity utilisation remained broadly unchanged compared with pre-war levels. The combined share of businesses operating at near-full (75–99%) and full (100%) capacity increased from 63% to 64%. Other changes were also minor. In particular, the share of businesses operating at 50–74% of their pre-war capacity edged down from 23% to 21%.

Uncertainty over the six-month outlook increased slightly both regarding the overall economic situation in the country, from 26.5% to 32%, and the financial and economic condition of businesses, from 21.7% to 24.2%.

“In the longer term, we are also seeing a slight increase in the share of businesses unable to say what their situation will look like two years from now, from 38.2% to 40.5%. However, compared with July 2025, the increase is more pronounced. A year ago, businesses were less uncertain, with 31.4% unable to assess their long-term prospects,” said Oksana Kuziakiv.

At the same time, among businesses able to assess their prospects two years ahead, 86.9% reported no plans to make any changes in July. The share planning to expand their operations increased from 10% to 11.6%, while the share planning to scale back declined from 4.3% to 1.5% – the lowest level since spring 2025.

In manufacturing, current performance improved: 28.7% of businesses reported increasing their production volumes, up from 26.1% in June. At the same time, expectations for production over the next three months were more cautious.

A similar trend was observed in exports: the share of businesses reporting an increase in current exports rose from 27.4% to 29.5%, while expectations for the next three months remained largely unchanged.

“Businesses are now expecting inflation to accelerate: both the expected price indices for raw materials and inputs and those for finished products increased,” said Oksana Kuziakiv.

The average order backlog increased slightly, from 2.8 to 2.9 months.

“The share of businesses with an order backlog of 3–5 months increased from 19% to 25%. This was driven by a decline in the share of businesses with orders covering 1–2 months, from 37% to 31%. The most positive scenario would be an increase in the share of businesses with orders covering 12 months or more, whereas currently only 4% have such a backlog,” Oksana Kuziakiv stressed.

The longest order backlogs were reported by businesses in the wood-processing industry, at 3.9 months. Other sectors with relatively long backlogs included the chemical industry (3.8 months), the metal and metal products industry (3.5 months), and the food industry (3 months). The shortest order backlog was reported by manufacturers of construction materials, at 1.5 months.

The IER’s New Monthly Enterprises Survey (NRES) covers up to 500 Ukrainian industrial enterprises across 21 of Ukraine’s 27 regions. The survey has been conducted monthly since May 2022.

A video presentation of the July survey results is available here.