Economic sentiment drops on business, consumer confidence

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Cyprus’ economic sentiment in July dipped 4.7 points from June, reflecting worsening consumer confidence and weaker business activity in services.

Uncertainty among firms in all sectors and consumers painted a gloomier outlook.

The Economic Sentiment Indicator (ESI), compiled by the University of Cyprus’ Economic Research Centre, fell by 4.7 units in July from the previous month to 105.6 units.

A year ago, the ESI registered only 82.3 points following a harsh national lockdown.

In July, the ESI was still above the long-term average of 100 units since March 2020, the start of the COVID-19 pandemic.

Indicators have been moving upward, but this is the first drop since February, reflecting insecurity during the fourth wave of coronavirus.

According to UCY economists, the Services Confidence Indicator decreased due to less favourable assessments of past performance (business situation and demand) and downward revisions of sales expectations.

A marginal dip in the Retail Trade Confidence Indicator was also due to downward revision sales expectations.

Furthermore, a small rise in the Construction Confidence Indicator was driven by positive assessments in employment expectations.

Upward revisions in production expectations drove the marginal rise in the industry confidence indicator.

However, consumer confidence slumped after reaching its highest level in June since the pandemic.

Assessments of current and future household financial conditions and expectations about the economy deteriorated.

In July, consumers revised their expectations about their financial conditions and the Cyprus economy downwards; their intention to make major purchases weakened.