CYPRUS: Economic sentiment deteriorates in August

Economic sentiment in Cyprus deteriorated in August as the Economic Sentiment Indicator compiled by the University of Cyprus (ESICypERC) decreased by 7 points compared with July, to the same level in September last year.

The decline resulted mainly from the weakening of business confidence in services. The deterioration in economic confidence in construction and industry as well as among consumers had a smaller impact on the ESI-CypERC index.

The Services Confidence Indicator fell sharply due to firms’ less optimistic assessments of recent business conditions (i.e. business situation and demand over the last three months) and downward revisions of demand expectations. The deterioration in services confidence was primarily driven by the less positive responses recorded in August in the sub-sectors of financial services and activities auxiliary to financial and insurance services. Also, the downward revisions of demand expectations in the subsectors of hotels, warehousing and support activities for transportation had a large negative effect on services confidence.

The Retail Trade Confidence Indicator remained unchanged as the improvement in firms’ assessments concerning past sales was offset by the deterioration in respondents’ views on current stock volumes and future sales.

The Construction Confidence Indicator decreased slightly due to downward revisions of firms’ future employment plans.

The Industry Confidence Indicator declined as a result of the deterioration in firms’ assessments of the stock of finished products and the downward revision of production expectations.

The Consumer Confidence Indicator decreased marginally as consumers were less optimistic about their future financial situation and their future savings.