Post-electoral business confidence slumped – Central Bank

Survey data for the third quarter of 2013 has found a deterioration in confi­dence among firms oper­ating in the manufactur­ing and service sectors, the Central Bank of Malta latest review shows.

But in contrast, confidence improved among con­sumers, and remained unchanged at very low levels in the construc­tion sector, which has seen deteriorating levels of business in the last years.

Overall economic sen­timent indicator (ESI) fell to 104.1 in September from 105.2 in June, but remained above its long-term average of 100.3.

Confidence among construction firms remained unchanged, at -42 in September com­pared with three months earlier, reporting "below normal" demand for construction units, and a greater intention to reduce their workforce in the subsequent three months.

The strong improve­ment in confidence among service provid­ers observed in the second quarter of 2013 proved to be short-lived as the indicator fell to 13 in September from the recent high level of 21 registered in June. As a result, the indicator moved again below its long-term average of 19.

Although overall confidence decreased, expectations with respect to employment levels improved.

Consumer confidence indicator reported gains and stood at -6 in September as against -12 in June. The indicator remained above its long-run average of -26 and is at the highest level since early 2008.

Respondents' assessments of the gen­eral economic situation and their own financial position in the forthcom­ing 12 months improved. In September the majori­ty of respondents expect­ed unemployment to fall, whereas in June they had believed that the number of unemployed would increase. Moreover, con­sumers were less pessi­mistic about their ability to save in the forthcoming 12 months.

Since the beginning of the year, all components of the indicator improved, with the bal­ance of replies regarding households' own financial situation, the general economic situa­tion and the outlook for unemployment turning positive. Meanwhile, although consumers' assessment of their ability to save improved, the balance of replies indicated that they were unlikely to save over the forthcoming 12 months.

Supplementary survey information shows that the proportion of respondents considering that the timing was right to make major purchases, given the existing economic situation, decreased slightly compared with June. In September, on balance compared with June, a smaller number of respondents expected prices to rise over the forthcoming 12 months.