Eco­nomic sen­ti­ment im­proves, says UCy

Financial Mirror (Cyprus) - - FRONT PAGE -

The busi­ness cli­mate im­proved in De­cem­ber with the Eco­nomic Sen­ti­ment Indi­ca­tor (ESI) gen­er­ated by the Eco­nomics Re­search Cen­tre of the Univer­sity of Cyprus ris­ing by 1.3 points from the pre­vi­ous month to 107.6, equal to the num­ber recorded in Oc­to­ber and marginally shy of the year high of 107.7 recorded in April.

Year-on-year, the ESI rose by 2.1 points from 105.5 in De­cem­ber 2014.

The ERC said in its monthly re­port that in 2014 the ESI had been on a re­cov­ery course, while in 2015 the Indi­ca­tor showed a strength­en­ing of eco­nomic con­fi­dence, record­ing prices above the long term av­er­age through­out the year.

In De­cem­ber, busi­nesses ex­pected de­mand and em­ploy­ment over the next three months to re­main at the marginally pos­i­tive lev­els of Novem­ber. The trend for prices to drop in the next three months ap­pears to be strength­ened, com­pared to Novem­ber.

The im­prove­ment of the ESI is due to the im­prove­ment of the busi­ness cli­mate in ser­vices and, to a smaller ex­tent, to re­tail trade, the ERC said.

In the ser­vices sec­tor, the busi­ness cli­mate was bet­ter due to an im­prove­ment in the cur­rent sit­u­a­tion and expectations. Com­pared to Novem­ber, the re­sponses of the busi­nesses re­gard­ing their eco­nomic sit­u­a­tion and the num­ber of employees dur­ing the last quar­ter were more pos­i­tive. Fur­ther­more, in De­cem­ber a sig­nif­i­cant im­prove­ment was recorded in the expectations of busi­nesses re­gard­ing their turnover for the next few months.

In re­tail trade, the busi­ness sit­u­a­tion im­proved marginally due to bet­ter expectations. Com­pared to Novem­ber, some busi­nesses no­ticed a drop in sales from the last quar­ter, while their re­sponses on cur­rent stocks re­mained un­changed at the same lev­els for the sea­son. In De­cem­ber, ex­pected busi­ness ac­tiv­ity and or­ders placed with sup­pli­ers for the next three months were more favourable com­pared to Novem­ber. The ex­pected em­ploy­ment for the next three months re­mained at the marginally neg­a­tive lev­els of Novem­ber, while the busi­nesses’ ex­pected sell­ing prices for the next three months recorded a drop.

In con­struc­tion, the cli­mate wors­ened marginally due to the de­te­ri­o­ra­tion of the cur­rent sit­u­a­tion and, to a lesser ex­tent, expectations. In De­cem­ber, the as­sess­ment of busi­nesses re­gard­ing their con­struc­tion ac­tiv­ity im­proved, while their re­sponses re­gard­ing cur­rent over­all or­der books and their expectations re­gard­ing em­ploy­ment over the next three months were more pes­simistic than Novem­ber. Fur­ther­more, in De­cem­ber fewer busi­nesses said they were plan­ning to re­duce sell­ing prices over the next three months.

In man­u­fac­tur­ing, the cli­mate re­mained un­changed. De­cem­ber as­sess­ments re­gard­ing pro­duc­tion over the past three months and cur­rent ex­port or­der books were more neg­a­tive than Novem­ber. On the other hand, the re­sponses for cur­rent over­all or­der books and expectations re­gard­ing em­ploy­ment for the next three months im­proved.

The Con­sumer Con­fi­dence Indi­ca­tor wors­ened in De­cem­ber, com­pared to Novem­ber. The as­sess­ments of the con­sumers re­gard­ing the eco­nomic sit­u­a­tion of Cyprus and house­holds in the past 12 months were worse than Novem­ber. Fur­ther­more, their re­sponses re­gard­ing the ex­pected fi­nan­cial sit­u­a­tion of house­holds in the next 12 months were more pes­simistic, while their es­ti­ma­tions re­gard­ing the eco­nomic sit­u­a­tion of Cyprus re­mained at the same lev­els as Novem­ber.

The ERC said that in De­cem­ber a larger per­cent­age of per­sons asked ex­pected an in­crease in un­em­ploy­ment over the next 12 months.

Com­pared to Novem­ber, fewer con­sumers no­ticed stable or lower prices over the past 12 months, while, as in Novem­ber, the ma­jor­ity ex­pected prices to re­main stable or drop over the next few months.

In De­cem­ber, more con­sumers con­sid­ered the cur­rent pe­riod un­suit­able for ma­jor pur­chases and fewer said they would make any such pur­chase over the next 12 months.

Even though con­sumer opin­ion re­gard­ing the suit­abil­ity of the present for sav­ings re­mained the same, in De­cem­ber it was less neg­a­tive re­gard­ing sav­ings over the next 12 months.

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