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Economic sentiment hits 2.5-y high

29/01/2014 14:00
Economic sentiment in Cyprus improved for the ninth consecutive month in January, hitting a 2.5-year high but remaining fragile.

According to the University of Cyprus Economic Research Centre, the economic sentiment has increased by 2.4 points in January 2014 with the Index of Economic Sentiment reaching 87.6 points from 85.2 points in December.

In its report on the economic sentiment figures the Centre notes that the index continues to record increase for the ninth consecutive month, reaching the highest point of the past two and a half years.

“While confidence indicators in services, retailing and manufacturing remain negative, the trends of their improvement seem to have strengthened in recent months, mainly reflecting the flexibility of those sectors in a state of recession”, the Centre said.

"On the other hand, the level and fluctuations of sentiment indicators in constructions and consumers suggest that restoring confidence does not occur uniformly across all sectors of the economy, creating risks to the economic activity in the next quarters," it added.

The January increase is due to the improvement of the sentiment in the services sector and - to a lesser extent - in retail trade and manufacturing.

The rise of the economic sentiment in services emerged from the more positive assessments of the current business conditions and the more favourable demand prospects.

The improvement of the climate in retailing and manufacturing is associated with the increased sales in the last quarter and expectations for higher production levels in the coming months respectively.
The deterioration of the business climate in constructions is the result of more negative assessments of firms for the current construction activity, the future projects and thus the anticipated employment.

Despite the decline in the consumers’ expectations on unemployment in Cyprus, the unfavourable assessments on the financial situation of their households and Cyprus next year undermine consumer confidence.