Economic sentiment in Cyprus has dipped significantly this month, reflecting weaker business confidence in the services and construction sectors. According to a survey conducted by the University of Cyprus, the Economic Sentiment Indicator (ESI) recorded a decline of 1.8 points in August, marking the lowest level since the same month last year.
- The full report from the University of Cyprus provides deeper insights into these trends and their implications for the economy moving forward.
The Economics Research Centre of the university reported that the ESI now stands at 103.7 points. This decline is attributed largely to a sharp fall in the Services Confidence Indicator, which is influenced by less favourable assessments from firms regarding their recent performance, including business situation and turnover.
“The sharp decline in the Services Confidence Indicator was driven by less favourable assessments of firms’ recent performance (business situation, turnover), as well as weaker turnover expectations,” the survey highlighted.
In addition to the downturn in services, the Construction Confidence Indicator also fell, reflecting a deterioration in firms’ views on their order books. This suggests that businesses are experiencing challenges in securing new projects, contributing to the overall economic sentiment decline.
Interestingly, despite the drop in the ESI, the Economic Uncertainty Indicator saw a further decline in August, indicating a reduction in business uncertainty, particularly within the services sector. Consumer uncertainty also decreased, hinting at a more stable outlook for households.
The Consumer Confidence Indicator, however, painted a contrasting picture as it rose in August. All four components of this index improved, indicating that consumers are feeling more optimistic about their financial situation. “More specifically, consumers expressed more favourable views on their recent and future financial situation. Additionally, consumers revised their expectations about economic conditions in Cyprus upwards. Finally, consumers’ intentions to make major purchases strengthened in August,” the report stated.
Furthermore, the Retail Trade Confidence Indicator increased for the second consecutive month, buoyed by improved assessments of stock levels and stronger sales expectations among retailers. This suggests a potential resilience in consumer spending despite the broader economic challenges.
The full report from the University of Cyprus provides deeper insights into these trends and their implications for the economy moving forward.
