Op­ti­mism in con­struc­tion sec­tor off­sets de­cline in re­tail sec­tor

The Malta Business Weekly - - FRONT PAGE -

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.

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