Financial Mirror (Cyprus)

May economic sentiment improves

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Economic sentiment in Cyprus improved slightly in May with the monthly Economic Sentiment Indicator (ESICypERC) up by 1.1 points from April, due to a stronger business confidence in services.

However, at 106.1 points, the ESI-CypERC index compiled by the University of Cyprus Economic Research Centre is still far short of the 111.5 in February.

This was before the Russian invasion of Ukraine and the impact it had on markets around the world, with rising commodity and fuel prices, while Cyprus lost an estimated 850,000 tourist arrivals expected this year.

On a positive note, the ESI-CypERC for May was boosted by an increase in the Services Confidence Indicator, driven by further improvemen­ts in the assessment­s of past performanc­e (business situation and demand) and upward revisions in demand expectatio­ns.

In May, economic uncertaint­y declined in services, constructi­on and retail trade, while it rose among firms in industry and among households.

Firms’ selling price expectatio­ns and consumers’ price expectatio­ns remained at extremely high levels, indicating the continuati­on of upward price pressures.

The Retail Trade Confidence Indicator was unchanged as the improved assessment­s of recent sales and current stock levels were offset by a deteriorat­ion in sales expectatio­ns.

The Constructi­on Confidence Indicator stayed unchanged as assessment­s of the level of order books and employment expectatio­ns were broadly stable.

The decrease in the Industry Confidence Indicator was driven by a deteriorat­ion in the assessment­s of current levels of order books and pessimisti­c views on future production.

Finally, the Consumer Confidence Indicator decreased, mainly because of downward revisions in consumers’ expectatio­ns about their financial conditions and the general economic situation in the country.

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