Economic sentiment in May climbs above long-term average

The economic sentiment indicator in May rose above the long-term average of 100 points in May, reflecting the improvement of business sentiment in Cyprus, as economic activity returns gradually to normality.

The Economic Sentiment Indicator (ESI) compiled by the University of Cyprus’ Economic Research Centre, in May rose by 7.6 units compared with the previous month reaching 104.1 units. The ESI returned above the long-term average of 100 units since March 2020, before the COVID-19 pandemic outbreak in Cyprus.
 
The ESI has been moving upward since March 2021 reflecting the favourable conditions for economic activity in the coming quarters, the ERC said.

The increase in the ESI was driven by improvements in business confidence in all sectors.
 
According to the ERC, the Services Confidence Indicator increased strongly for the third consecutive month in May, as a result of the improved assessments of past performance (business situation and demand) and significant upward revisions in demand expectations.
 
In the Retail Trade Confidence Indicator, the rise was due to more favourable views on the current stock levels and upward revisions in sales expectations
 
Furthermore, the improvement in the Construction Confidence Indicator was driven by more favourable assessments of the levels of order books and upward revisions in employment expectations, the ERC added.
 
The rise in the industry confidence indicator was driven by more favourable views on the current levels of order books and stocks of finished products, as well as from upward revisions in production expectations.
 
However, the Confidence Indicator remained unchanged, as all components of the Indicator (such as assessments of recent and future household financial conditions, expectations about economic conditions in Cyprus, intentions to make major purchases) remained roughly unchanged in May, the ERC added.