Ukrainian business sentiment weakened in August as Russian strikes, disruptions to logistics and a blockade of seaports weighed on companies' expectations, while only the construction sector remained cautiously optimistic, the National Bank of Ukraine said on September 1, reported Ukraine Business News.

The central bank's Business Activity Expectations Index fell to 48.3 in August from 50.1 in July and 49.0 a year earlier. The reading was the weakest since February, when the index stood at 45.9 and fell into negative territory.

The survey, conducted from Aug. 4 to 21 among 586 companies, pointed to mounting pressure from damage caused by the war. The central bank cited "significant losses from the widespread destruction of production facilities, warehouses, and logistics infrastructure, the blockage of seaports, high fuel prices, and a shortage of skilled workers".

These pressures were partly offset by steady consumer demand, international financial support, government funding for infrastructure and road reconstruction, a stable energy sector and seasonal factors.

Construction was the only surveyed sector to report a positive outlook, although its index fell to 50.7 from 54.2 in July and 54.0 a year earlier. The sector continued to benefit from government spending on infrastructure.

Services improved modestly, with its index rising to 49.5 from 48.8 in July and 47.0 a year earlier. Retail sentiment deteriorated sharply, however, with the sector's index falling to 47.5 from 50.8.

Manufacturing recorded the weakest reading among the sectors surveyed, dropping to 47.3 from 50.7 in July and 48.7 a year earlier. Companies expected lower output and fewer new export orders while reporting an increase in raw-material inventories.

Businesses also broadly expected price pressures to intensify, with construction the only sector anticipating a slowdown in price growth.

Labour market expectations were similarly subdued. Construction firms were the only respondents planning to increase payrolls, while manufacturers expected the steepest reductions in employment.