The economic sentiment indicator rose by 2.3 units in May to 118.4, the highest since June 2001, on improved confidence in services and to a lesser extent in retail trade and consumer confidence, the University of Cyprus said.
The improved business confidence in services in May resulted from more positive evaluation of the financial situation and company demand over the previous three months, as well as more favourable assessment of demand over the three months to come, the Economic Research Centre of the University of Cyprus said in an emailed statement on Thursday. The improvement in confidence in retail trade was marginal as worsening expectations about future sales almost offset an improvement in the evaluation of the current situation of the interviewed companies.
This month, business confidence in construction and industry worsened, the ERC said. Construction companies revised their employment plans downwards, while industrial units said they expected to produce less over the next three months.
As households are more optimistic in their expectation of their financial situation and the course of unemployment over the next 12 months, this resulted in an increase in consumer confidence in May, the ERC said. It added that consumer tendency towards saving was less negative.