Economic Sentiment indicator at 116 in the Eurozone, at 117.6 in Cyprus for December 2017

In December, the Economic Sentiment Indicator (ESI) increased further, continuing the upward trend observable since autumn 2016. The indicator increased strongly by 1.4 points in the euro area (to 116.0), and by 1.6 points in the EU (to 115.9), reaching the highest levels since October (euro area) and August 2000 (EU), according to DGECFIN of the European Commission.

In Cyprusthe, the ESI dropped to 117.6 in December 2017, after all time record high of 118.8 points in November 2017.

Meanwhile also in December 2017, the Business Climate Indicator (BCI) for the euro area increased (+0.17 points to +1.66). This is the highest level recorded since 1985.

The more optimistic euro-area sentiment recorded in December was broad based, primarily boosted by marked increases in confidence in the services, retail trade and construction sectors. Confidence rose further in industry and among consumers as well. Amongst the largest euro-area economies, the ESI rose strongly in France (+2.3) and Germany (+1.6) and, to a lesser extent, in the Netherlands (+0.7), while it remained unchanged in Italy (0.0) and decreased slightly in Spain (-0.8).

Industry confidence (+1.0) continued the rally it had embarked upon last autumn, thanks to managers higher production expectations and, to a lesser extent, improved appraisals of the current level of overall order books and of the stocks of finished products. Of the questions not included in the confidence indicator, managers assessment of the past production improved markedly, while their views on export order books remained broadly unchanged.

The upsurge in services confidence (+2.0) resulted from managers markedly improved views on all three components of the indicator, i.e. past and expected demand, and the past business situation. The improvement in consumer confidence (+0.5) reflected households more optimistic assessment of future unemployment and, to a lesser extent, their savings expectations and the future general economic situation, while their assessment of their future financial situation remained broadly unchanged.

Higher retail trade confidence (+1.9) resulted from a strong improvement in managers views on the present business situation and, to some extent, the adequacy of the volume of stocks, while their assessments of the future business situation remained virtually stable. The rise in construction confidence (+1.2) was fuelled by upward revisions in managers employment expectations, while their assessment of the level of order books remained broadly unchanged.

Finally, the rise (+3.0) in financial services confidence (not included in the ESI) resulted from improved appraisals of the past business situation, future demand and, in particular, past demand.

Employment plans saw significant upward revisions in industry, reaching the highest level in more than 30 years. Employment plans also improved in construction, reaching a 10-year high, and services. In retail trade, employment plans edged down from their 30-year high of November. Selling price expectations increased in construction and, more steeply, in industry, while decreasing slightly in retail trade and remaining virtually unchanged in services. Consumer price expectations fell markedly in December

The marginally more optimistic outcome for the EU ESI (+1.6) resulted from a marked improvement of sentiment in the largest non-euro area EU economy, the UK (+3.6); also Poland (+1.2) recorded a plus. In line with the euro area, confidence improved strongly in services, construction, financial services and, to a lesser extent, in industry. However, EU confidence remained virtually unchanged in retail trade and among consumers.

Source: Cyprus News Agency