Positive shifts in Cyprus' economic sentiment for November 2023

Cyprus's economic sentiment improved significantly in November 2023, as seen by the increase in the Economic Sentiment Indicator (ESI-CypERC).

The Economic Sentiment Indicator (ESI-CypERC) for Cyprus showed positive gains in November 2023 over the previous month, according to the latest survey conducted by the University of Cyprus's Economic Research Centre (ERC) in association with RAI Consultants Ltd.

November saw a noteworthy 2.6-point improvement in the ESI-CypERC, indicating a favorable turn in economic state. The services and construction industries' increased confidence was the main cause of this development.

The increase in the Services Confidence Indicator was primarily caused by notable improvements in business evaluations of their recent performance, which included turnover and business situation, according to the ERC's results. Expectations for demand were also slightly revised upward. The construction industry's improved assessments of current order book levels and increases in employment expectations were credited with the improvement in the Construction Confidence Indicator.

Still, not every industry saw consistent development. Declining sales estimates in companies' views on current sales and stock levels, leaving the Retail Trade Confidence Indicator unchanged. A decline in the manufacturing sector's industry confidence indicator was attributed to deteriorating expectations for future output and order books.

In November, the study also showed a decrease in economic uncertainty, mostly as a result of a fall in concern among service-based businesses. On the other hand, consumers also reported a minor increase in uncertainty, while firms in the retail trade sector indicated higher levels of worry.

Regarding consumer mood, the ERC said that while many still expected unemployment to grow, consumers were less negative about future labor market circumstances in November than they did in October. Furthermore, for the second consecutive month, consumers' evaluations of price changes over the previous 12 months showed some relief from rising pressure.

Collectively, these data point to a favorable trend in Cyprus's economic outlook for November 2023, due to noteworthy gains in the building and services industries despite difficulties in other sectors of the economy.