Economic sentiment in Cyprus has taken a downturn for the second consecutive month, with the Economic Sentiment Indicator (ESI-CypERC) dropping by 1.6 points in September to reach 102.1, down from 103.7 in August.
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This decline is attributed to a noticeable weakening in business confidence, particularly within the services and construction sectors. According to the Economics Research Centre at the University of Cyprus, the fall in the Services Confidence Indicator reflects a decline in firms’ assessments of their recent performance, despite a slight improvement in turnover expectations.
Economic sentiment: Woes in the Services Sector
The Services Confidence Indicator has now fallen for two months running. This trend is largely due to negative evaluations by firms regarding their current business situation and turnover, which contrasts with the more optimistic outlook some firms have for future turnover.
Challenges in Retail Trade
In the realm of retail, a minor decrease in the Retail Trade Confidence Indicator can be observed. This reduction is primarily the result of downward revisions in sales expectations, signalling challenges for businesses in this sector.
Construction Sector Struggles
The construction sector also faces difficulties, with the Construction Confidence Indicator declining for the second month in a row. Deteriorating perceptions regarding order book levels and reduced expectations for employment are key factors contributing to this decline.
Industry Confidence Shows Improvement
In contrast to these findings, the Industry Confidence Indicator registered an increase, reflecting improved assessments of current order book levels and stock of finished products. This positive shift has been accompanied by upward revisions in production expectations, highlighting a mixed picture in Cyprus’s economic landscape.
Consumer Confidence and Economic Uncertainty
On the consumer front, the Consumer Confidence Indicator saw a slight uptick in September, driven by more optimistic views regarding the general economic conditions in Cyprus. However, this optimism is tempered by deteriorating expectations concerning personal financial situations and weakened intentions to make significant purchases.
Additionally, the Economic Uncertainty Indicator for Cyprus rose sharply in September to 15.8 points, up from 11.0 in August. This rise indicates an increase in business uncertainty, particularly within the services sector. Conversely, uncertainties in other sectors and among consumers have shown a decline, suggesting a complex economic narrative.