COVID19: Consumer confidence plunges to new low

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COVID-19 continues to take its toll on business and consumer confidence with the monthly indicator tracked by the University of Cyprus dropping to an all-time low of 72.9 points in May.

This was due to “more negative assessments of the recent economic conditions than to worsening expectations”.

The UCY Economics Research Centre Economic Sentiment Indicator (ESI-CypERC) decreased by 4.1 points to 72.9 from 77 in April and 98.9 in March, when the impact of the coronavirus was first felt.

The decrease was driven by additional confidence losses in services and retail trade, and to a smaller extent, by a weakening of confidence in construction, the report said.

A decline in the Services Confidence Indicator resulted from firms’ less favourable views on their past business situation and past demand, while the decline in the Retail Trade Confidence Indicator was due to more negative assessments of their past sales and adverse views on stock levels.

The Construction Confidence Indicator decreased as a result of more negative assessments of the level of order books and downward revisions in employment expectations.

The Industry Confidence Indicator increased due to less adverse views on the current levels of stocks of finished products and upward revisions in production expectations.

There was a slight improvement in the Services sector for “expected employment in the next 3 months”, up 3 points from -7 in April to -4 in May.

A marginal increase in the Consumer Confidence Indicator by four points, from -33 points in April to -29 in May, was mainly driven by upward revisions in consumers’ expectations about their financial situation and economic conditions in Cyprus.

New survey data which measure economic uncertainty, show the highest levels of uncertainty in May were registered in the sectors of construction and industry.

The largest increase in the level of uncertainty compared with 2019 was recorded in the services sector.

In April, economic sentiment fell 21.9 points from March when the economy was virtually shut down as the Economic Sentiment Indicator (ESI-CypERC) suffered a historically large drop.

The UCY Economic Research Centre said sentiment declined below its long-run average, suggesting a grim outlook for economic activity in Cyprus, as a result of the coronavirus pandemic.