Optimism in construction sector offsets decline in retail sector

Dow Jones -26.99 23,530.24 S&P 500 -3.03 2,587.54 During the second quarter of 2017, the economic sentiment indicator rose marginally to 114, from 113 in the preceding quarter, thus remaining above its long-term average of 101.

Increased sentiment in construction, among consumers and in the industrial sector, more than offset a significant deterioration in the retail sector.

Confidence within the services sector remained broadly unchanged.

This emerges from the latest Central Bank’s Quarterly Review, issued yesterday.

Confidence in the construction sector turns positive

Sentiment in the construction sector increased significantly during the second quarter of 2017. Indeed, the indicator turned positive after five consecutive quarters of negative readings, reaching 11. The rise in confidence during the second quarter of 2017 was mainly driven by firms’ assessment of order books. Indeed, firms assessed their order book levels to be above normal for the first time in seven quarters. Employment expectations for the subsequent three months were also more optimistic.

Additional survey data indicate that in the second quarter of this year, more respondents have on balance, reported positive building activity developments during the preceding three months. Moreover, a higher net percentage of firms expected selling prices to rise in the subsequent three months. Consumer confidence increases The consumer confidence indicator rose to 5 in the second quarter of 2017, from 2 in the Nasdaq -5.62 6,763.78 preceding three-month period. Therefore, it remained well above its long-term average of -19. All components contributed to the increase in consumer sentiment, with savings expectations for the year ahead being the main driver.

Compared with the first quarter of 2017, a larger share of respondents expected their financial situation and the general economic situation over the following 12 months to improve. Also, more Nikkei 225 -23.78 22,913.82 Hang Seng -86.74 28,907.60 respondents expected unemployment to fall further compared with the first quarter of 2017. Additional survey data suggest that the share of consumers intending to reduce major purchases over the subsequent 12 months decreased further. At the same time, on balance, a higher share of consumers expected inflation to rise. Industrial confidence edges up Confidence in the industrial sec- FTSE 100 +8.98 7,522.55 tor edged up to 8 in the second quarter of 2017, from 7 in the preceding quarter, thus remaining above its long-term average of -4. The marginal increase in industrial sentiment during the quarter under review was driven by firms’ assessment of order books, which were no longer seen as being below what is normal for the season.