Eco­nomic sen­ti­ment im­proved in Au­gust

Financial Mirror (Cyprus) - - FRONT PAGE -

Eco­nomic sen­ti­ment in Cyprus im­proved in Au­gust as the Eco­nomic Sen­ti­ment In­di­ca­tor (ESI) of the Univer­sity of Cyprus Eco­nom­ics Re­search Cen­tre in­creased by 5.1 points to 115 points com­pared to July’s 109.9, as a re­sult of the pickup of busi­ness con­fi­dence in ser­vices, re­tail trade and in­dus­try. But con­struc­tion re­mained in the dol­drums, while con­sumer con­fi­dence was up marginally.

The monthly sur­vey found that the Ser­vices Con­fi­dence In­di­ca­tor rose due to firms’ more pos­i­tive as­sess­ments of past busi­ness sit­u­a­tion and de­mand, as well as be­cause of more op­ti­mistic views re­gard­ing firms’ turnover over the next three months.

The Re­tail Trade Con­fi­dence In­di­ca­tor in­creased as a re­sult of more pos­i­tive re­sponses re­gard­ing firms’ past sales and more op­ti­mistic sales ex­pec­ta­tions over the next three months.

The in­crease in the In­dus­try Con­fi­dence In­di­ca­tor is driven by the up­ward re­vi­sion of firms’ as­sess­ments of pro­duc­tion plans over the next three months, as well as by the im­prove­ment of firms’ views of the level of their cur­rent or­der books and stock of fin­ished prod­ucts.

The Con­struc­tion Con­fi­dence In­di­ca­tor de­te­ri­o­rated due to more pes­simistic as­sess­ments of the level of cur­rent or­der books and down­ward re­vi­sions em­ploy­ment ex­pec­ta­tions.

The Con­sumer Con­fi­dence In­di­ca­tor in­creased marginally as the im­prove­ment of con­sumers’ as­sess­ments of fu­ture eco­nomic

in

firms’ con­di­tions (house­holds, coun­try, labour mar­ket) was off­set by the de­te­ri­o­ra­tion of sav­ings ex­pec­ta­tions.

Al­though dif­fer­ent in num­bers, ac­cord­ing to DGECFIN ser­vices of the Euro­pean Com­mis­sion, the Cyprus ESI in­creased by al­most 6 points to 116.2 in Au­gust (from 110.1 in July), mainly due to in­crease in ser­vices con­fi­dence from 14.3 points in July to 26.6 in Au­gust and re­tail trade that turned pos­i­tive (from -1.2 to 3.3). Con­struc­tion ex­pec­ta­tions re­main neg­a­tive (-24.4 -31.7), con­sumer con­fi­dence was slightly bet­ter (-8.2 -6.9 ) and the sen­ti­ment in the in­dus­try sec­tor sig­nif­i­cantly turned around (-0.3 to 8.3 ).

In Au­gust 2016, the Busi­ness Cli­mate In­di­ca­tor (BCI) for the euro area de­creased markedly (by 0.36 points to +0.02), as man­agers’ as­sess­ments of past pro­duc­tion, the level of over­all and ex­port or­der books de­te­ri­o­rated markedly. Pro­duc­tion ex­pec­ta­tions wors­ened much less and views on the stocks of fin­ished prod­ucts re­mained sta­ble. The same can be said also for the ESI (down by 1.0 points to 103.5) and the EU (by 0.9 points to 103.8)

The de­te­ri­o­ra­tion of euro-area sen­ti­ment re­sulted from weak­ened con­fi­dence in all busi­ness sec­tors but con­struc­tion, as well as, to a lesser ex­tent, among con­sumers. The ESI de­clined in four of the five largest eu­roarea economies, namely in the Nether­lands (-3.6), Italy (-2.1), Spain (-1.5) and Ger­many (-1.1), while it booked an in­crease in France (+0.8).

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