Confidence indices: Good or bad?
One of the most striking evaluations of TurkStat’s sectoral confidence indices came from economist Zafer Yukseler. Let’s leave the floor to him:
“According to the sectoral confidence indices announced by TurkStat, confidence in services and the retail sector increased slightly in September, while the construction sector confidence index increased by 8.3 percent. All sub-components of the construction sector confidence index increased.
Sales prices expectations increased by 8.2 percent in August and 2.5 percent in September, a 10.9 percent increase in the last two months.
The current level of formal orders received in September increased by 6.6 percent (14.7 percent in the last two months) and the expectation for total number of employees in the next three months increased by 9.4 percent (15 percent in the last two months).
Following the Central Bank’s interest rate cuts, loan rates decreased. The most significant decrease occurred in housing loan interest rates. Housing loan interest rates, which were 21.06 percent in July, decreased to 14.15 percent in August and 12.93 percent in September 1 to 13 as a result of campaigns initiated by public banks. The fall in housing loan interest rates in the last two months had a positive impact on the orders and employment expectations in the construction sector. The increase in orders received also increases the sales prices expectation.
As a result, the expectation is that construction companies will benefit significantly from the decrease in housing loan interest rates.”
Is there much to add to this assessment?
Another drop in real sector confidence
When the real sector confidence index was reached 102.5 in August, we said that the real sector confidence is gradually recovering but also emphasized that the trend is important, not monthly movements. The August index was the second highest this year. A decline was observed again in September. The index fell to 98.8. There is a decrease in all items that constitute the real sector confidence index. However, the decrease in one of these items, which indicates the stock of finished goods, does not indicate a negative situation, but rather a positive one. The decline in two of the index items is remarkable: production volume in the next three months and the order quantity in the next three months. The negative trend in these connected items is not a good sign.