Economic sentiment in Cyprus deteriorates in May

The economic sentinment in Cyprus in May 2019 deteriorated as the Economic Sentiment Indicator (ESICypERC) decreased by 1.3 points compared with April 2019. However, the Indicator continues to move higher than its long-term average of 100 points.

According to the Economics Research Centre of the University of Cyprus, the decline compared with April resulted from a worsening of economic confidence in services, retail trade, industry and among consumers.

It is noted that the Services Confidence Indicator declined due to a deterioration in firms’ assessments of their recent business situation, and downward revisions in demand expectations.

The Retail Trade Confidence Indicator decreased marginally as a result of more adverse assessments of recent sales and the volume of stocks.

Meanwhile, the Construction Confidence Indicator showed significant improvement driven by less pessimistic replies for the ongoing projects and more optimistic employment expectations in the next three months.

The Industry Confidence Indicator declined as a result of a deterioration in firms’ views on the current level of order books and the stocks of finished products.

Compared with the previous month, expectations of business regarding their turnover and the number of employees in the next quarter were significantly revised downwards. Expectations for sale prices in the following quarter were slightly revised upwards compared with April.

The decrease in the Consumer Confidence Indicator was driven by less favourable responses regarding households’ financial conditions and consumers’ intentions to make major purchases, the survey says.

In addition, the Economics Research Centre notes that consumers appear more restrained than in April as regards future large spending. In May, consumers` views regarding savings were more negative than in the previous month.
 
However, consumer responses as regards the general economic situation in Cyprus over the past 12 months, as well as their expectations for the future situation of their households and Cyprus in general, did not show any significant changes from the previous month`s levels.
 
In addition, consumer expectations of labor market conditions over the next 12 months showed little improvement, with the majority expecting  further decrease of the number of unemployed persons.

The Economics Research Centre of the University of Cyprus is an independent, non-profit organization with the aim of promoting scientific knowledge in economics, especially in matters concerning Cyprus.