Economic sentiment picks up

Economic sentiment in Cyprus recovered in October, as the Economic Sentiment Indicator (ESI-CypERC) rose by 2.0 points, following the decline in September to 102.1, from 103.7 in August.

The Economics Research Centre of the University of Cyprus said October increase in the overall ESI was driven by stronger business confidence in the services and construction sectors, where the biggest declines had been recorded in the previous two months.

The ERC said that the Services Confidence Indicator increased – following two consecutive months of marked declines – as all its components improved, namely assessments of the recent business situation and views on past and expected turnover.

A decrease in the Retail Trade Confidence Indicator was driven by a deterioration in firms’ views on recent sales and stock volumes, along with further downward revisions in sales expectations.

The Construction Confidence Indicator rose, as a result of improvements in firms’ order book levels and upward revisions in employment expectations.

The small decline in the Industry Confidence Indicator was due to less favourable assessments of the current levels of order books and downward revisions in production expectations.

The Consumer Confidence Indicator declined in October, reversing the course of the previous two months.

Consumers’ assessments of their recent financial situation deteriorated and their intentions to make major purchases weakened further. Additionally, consumers’ expectations about the general economic conditions in Cyprus worsened.

On the other hand, the Economic Uncertainty Indicator decreased in October to 11.7 points from 15.8 in September due to a reduction in business uncertainty across all sectors except industry, where business uncertainty rose slightly. Consumer uncertainty increased, but remained relatively low across all income groups, the UCy report concluded.