Business confidence remains low in manufacturing and construction sector

The CB said its confidence indicator had turned negative in May after hav­ing been in positive territory for eight months in a row, falling by 15 points from March to minus eights (-8) in June.

The picture painted now is that of a less optimistic production expectations, weaker orders, and to a lesser extent, the accumulation of stocks of finished goods.

A constant negative appears to be the outlook for construction firms: the index fell from -24 in March to -29 in June. “A higher balance of respon­dents expressed an intention to reduce their labour complement in the subsequent three months, while order book levels remained unchanged. Operators continued to indicate that weak demand was the main factor limiting con­struction activity.”

Even employment expectations have turned negative, with a large number of surveyed operators indicating insufficient demand as the main limitation on busi­ness expansion. The majority of manufacturers have also anticipated a fall in their selling prices over the subsequent three months.

Confidence among service pro­viders also deteriorated between March and June 2011, down by four percentage points to 23 in June. A fall in demand was reported, but a higher proportion of par­ticipants expected an increase in demand for services over the fol­lowing three months. Again, respon­dents expressed reduced optimism with respect to man­power levels. Sen­timent mainly worsened in financial intermediation, real estate, travel-related activities and motion picture, video & TV programme production. In con­trast, confidence improved among firms in the accommodation sector and those engaged in rent­al & leasing activities and broadcasting activities.

Consumer confidence

The consumer confidence indicator edged up during the second quarter of 2011, though the balance of replies remained negative. At -38 in June, the index stood three percentage points above the corresponding level in March.

“Consumers’ expectations regarding the unemployment outlook improved, as did their assessment of the general economic situation,” the Central Bank said.

But consumer surveys showed that respondents expect more inflationary rises, and that the time was not appropriate to make major purchases increased.

Labour deputy leader Anglu Farrugia also hit out at government performance, saying unemployment had risen by 298 between June and July 2011, over 53 during the same month in 2010.

He said the Central Bank’s quarterly review “played around with figures” by saying that consumer confidence had risen when in fact data showed it had fallen from -38 to -39 in the first six months of the year.