Economic sentiment confidence soars

During the fourth quarter of 2017, the economic sentiment indicator rose further to 120, from 114 in the preceding quarter, thus remaining above its long-term average of 100, the economic sentiment surveys published by the Central Bank’s Quarterly Review said. Sentiment improved within all sectors, with the most pronounced increase registered within the retail sector.

Confidence in the retail sector increases significantly

Sentiment in the retail sector rose to 21, from 8 in the third quarter of 2017. Hence, sentiment among retailers stood substantially above its longterm average of 2.

The rise in confidence was driven by all subcomponents, with both business activity expectations and assessment of past activity rising sharply. At the same time, compared with the third quarter, a marginally smaller share of respondents assessed stock levels to be above normal.

Additional survey data indicate that on balance, more firms expected employment to rise during the three months ahead, while firms expected selling prices to fall.

Confidence in the construction sector reaches an all-time high

Sentiment in the construction sector increased significantly during the fourth quarter of 2017. The indicator reached 27, thus standing at the highest level recorded since survey results for Malta became available.

The rise in confidence during the fourth quarter of 2017 was largely underpinned by firms’ assessment of order books, although employment expectations also improved slightly.

Additional survey data indicate that in the fourth quarter of 2017, more respondents, on balance, reported positive developments in building activity during the preceding three months. Overall the survey suggests that the construction sector has been increasingly meeting rising activity through higher utilisation of labour. Indeed, labour shortages remained the main factor limiting production in this sector, with this constraint mentioned more frequently at the turn of the year. Meanwhile, a higher net percentage of firms expected selling prices to rise in the subsequent three months.