Optimism in construction sector offsets decline in retail sector
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In contrast, stocks of finished goods were more pronounced, and production expectations for the subsequent three months were less optimistic, compared with the previous quarter.
Meanwhile, additional survey data suggest that more respondents expected to increase their labour complement in the subsequent three months. At the same time, on balance, fewer respondents expected to decrease their selling prices.
Confidence in the retail sector turns negative
Sentiment in the retail sector fell significantly to - 3 from 8 in the first quarter of 2017 and turned negative for the first time since the third quarter of 2014. Following this drop, it stood below its long-term average of 1.
The decline in confidence was driven by both firms’ assessment of past and expected business activity, with both indicators declining sharply between the two quarters under review. At the same time, on balance respondents continued to assess stock levels to be above normal, with the share of respondents expressing this view declining only marginally from that in the preceding quarter.
Additional survey data indicate that selling prices are expected to rise during the three months ahead, while on balance, respondents expected employment to decline.
Confidence in the services sector broadly unchanged
In the second quarter of 2017, the services confidence indicator was broadly unchanged at 27. Therefore, it still compared favourably with its longterm average of 22.
A slight weakening in firms’ assessment of their business situation over the preceding three months was offset by an increase in expectations of demand for the following three months. Their assessment of past demand however, was unchanged for the third consecutive quarter.
Additional survey data indicate that a smaller net share of respondents reported higher employment in the preceding three months. In contrast, employment expectations for the following three months were unchanged compared with the preceding quarter. Only a small net share of respondents indicated that they expected prices to increase in the following three months.