Cyprus economic sentiment sees slight decline — services sector concerns cited as cause

The Cyprus Economic Sentiment Index (ESI) saw a minor decline in October, primarily influenced by the weakening business climate in the services sector, according to a report by the University of Cyprus’ Economic Research Centre (CypERC).

According to the report, the ESI settled at 106 points in October, marking a small 0.5-point decrease compared to the previous month. This marks the second consecutive month of decline in the ESI.

In addition, according to the Economic Research Centre, the drop in the ESI was mainly a result of the deteriorating business climate in the services sector.

Conversely, the business climate in the construction sector strengthened, while consumer confidence remained at September levels. Changes in sentiment in other sectors in October were marginal.

The decline in the services sector’s sentiment was attributed to less favourable responses regarding business expectations for the current and next quarters.

The boost in the construction sector’s sentiment primarily arose from more optimistic estimates regarding employment in the industry for the next quarter.

In retail trade, sentiment slightly declined in October due to a worsening current business situation.

Meanwhile, manufacturing saw marginal improvement in sentiment due to reinforced production expectations.

Consumer sentiment in October remained at the same level seen in September. On the one hand, there was an improvement in assessments of households’ recent economic conditions and an increase in major purchase intentions.

What is more, expectations for the country’s economic situation experienced a significant deterioration.

Furthermore, the Economic Uncertainty Index declined in October due to reduced uncertainty among consumers and businesses across all sectors, except for the construction sector, which witnessed a slight increase in uncertainty, the centre concluded.