Construction slowdown drags economic sentiment in January

Economic sentiment in Cyprus deteriorated slightly in January, as the Economic Sentiment Indicator decreased by 0.6 points month-on-month to 108.2. However, it was up 3.1 points year-on-year.

The University of Cyprus Economics Research Centre said in its monthly ESI-CypERC report that the decline was driven by weaker business confidence in the sectors of construction and industry, as well as by lower consumer confidence.

The island’s construction sector came to a standstill in November, after a lengthy strike by concrete suppliers, with the housing and development industries slow to catch up.

The marginal increase in the Services Confidence Indicator resulted from more optimistic views on expected turnover, despite less favourable assessments of firms’ recent performance.

The Retail Trade Confidence Indicator increased marginally, as firms revised their sales expectations upwards.

The Construction Confidence Indicator decreased markedly, as firms assessed their current levels of order books more negatively and revised their employment expectations downwards.

The drop in the Industry Confidence Indicator resulted from a deterioration in firms’ assessments of the finished goods stocks.

The Consumer Confidence Indicator registered a small decrease in January.

Consumers’ views on their recent financial situation worsened and consumers’ intentions to make major purchases weakened in January. However, consumers’ expectations about their financial situation and the general economic conditions in Cyprus stayed at the relatively high levels reached in December.

On the other hand, the Economic Uncertainty Indicator for Cyprus decreased slightly, as firms’ uncertainty about their future business situation declined in all sectors except industry.

Consumers’ uncertainty about their future financial situation rose in January, although it remained below its historical average.