Services, consumers boost econ sentiment to 7-year high
A rise in confidence in the services sector and among consumers helped boost the monthly Economic Sentiment Indicator (ESI) by 6.6 points in August to 106.9, the highest level since the index started to take a downturn in late-2008.
In July, the ESI had dropped to a year-low of 100.3, having stabilised in the first five months of the year in the 103-104 range.
The Economics Research Centre of the University of Cyprus said that the climate change was driven by mainly positive responses to the monthly survey with a dose of optimism for current and future prospects among business, households and the economy in general.
The prospects in the construction sector also improved and were seen as “less negative” in August compared to July. On the other hand, the climate in the retail sector and manufacturing worsened, due to lower sales in the past quarter. However, the forecasts for increased activity in the retail sector suggest an improvement.
The marginal drop in the manufacturing sector confidence is linked to reduced orders and a negative outlook for future orders in the next quarter.
The UCy ERC added that the ESI “suggests volatile fluctuations compared to 2014 that predetermines a turning point in the economy from one of deflation to growth of GDP.”