Business confidence near pre-Covid levels

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Business confidence has reached near pre-Covid levels, boosted by services, construction and the manufacturing sectors, according to a leading economic sentiment benchmark, with the monthly survey suggesting uncertainty exists.

The December Economic Sentiment Indicator (ESI-CypERC) increased by 2.1 points compared with November 2021, according to the Economics Research Centre of the University of Cyprus.

The monthly reading was 110.7 points, up from 108.6 the previous month and tipped past the June high of 110.3.

It is marginally short of the 111.0 recorded in the ESI report for February 2020, after which it sunk by 35% to 77 points amid the coronavirus-inflicted economic meltdown.

The University of Cyprus said revisions upward in demand expectations mainly drove the December 2021 ESI increase in the Services Confidence Indicator.

The Retail Trade Confidence Indicator remained unchanged as the improved views on past, and future sales were offset by a deterioration in the assessments of current stock levels.

Construction improves

The Construction Confidence Indicator improved slightly due to upward revisions in employment expectations, despite a deterioration in the assessments of the current levels of order books.

The rise in the Industry Confidence Indicator resulted from more favourable views on the current levels of order books and upward revisions in production expectations.

The Consumer Confidence Indicator decreased marginally as consumers’ intentions for making major purchases in the near future weakened significantly.

On the other hand, the ESI found that uncertainty among firms decreased in December, while doubt among consumers stayed at the level registered in November.

Nevertheless, business uncertainty remains very high, particularly in retail trade and industry sectors.

Despite some downward revisions, the report also said that selling price expectations remained high in December.