Economic sentiment deteriorates in September

Weaker confidence in services and construction saw the Economic Sentiment Indicator (ESI-CypERC) decrease further by one point in September compared to August.

According to the Economics Research Centre of the University of Cyprus (CypERC), the decrease in the index was driven by weaker business confidence in services, construction and industry.

The indicator reached 80.6 points in September from 81.6 in August but it is way off last year’s level of 111.9 after the fallout from COVID-19 lockdown and other restrictions.

The marginal decrease in the Services Confidence Indicator resulted from downward revisions in demand expectations, despite improvements in firms’ assessments of past performance.

The Retail Trade Confidence Indicator remained unchanged from August; as assessments of past sales and current stock levels, as well as sales expectations, stayed broadly stable.

Moreover, the decline in the Construction Confidence Indicator was caused by a deterioration in firms’ assessments of the levels of order books and downward revisions in employment expectations.

According to the findings, the Industry Confidence Indicator decreased due to downward revisions in production expectations while the Consumer Confidence Indicator improved slightly.

In September, consumers assessed their recent financial conditions less adversely and revised their expectations about their future financial conditions and the future economic conditions in Cyprus upwards.

Nevertheless, CypERC says, consumers’ expectations about the future economic conditions in the country remain pessimistic.