Economic sentiment decreased in June: European Commission survey

The European Commission’s confidence surveys have shown the economic sentiment in Malta has decreased in June when compared to May.

In month-on-month terms, sentiment fell across all sectors, bar the services sector. The strongest decline was recorded in the construction sector.

Despite the decrease, sentiment remained slightly above its long-term average, which is estimated since November 2002. The Bank’s Business Conditions Index indicates that in June, annual growth in business activity edged up slightly compared to the previous month and thus remained above its long-term average, estimated since January 2000.

Additional survey information shows that in June, price expectations stood firmly below their year-ago level in the retail sector and in industry. Price expectations among firms in services, and among consumers also edged down compared with a year earlier. By contrast, price expectations in the construction sector were significantly above the level recorded in June 2022.

In May, industrial production grew at a slower pace, while retail trade rose at a marginally faster rate on a year-on-year basis, when compared with April. The unemployment rate returned to a historic low of 2.8% in May, from 2.9%, registered in the previous month, and 3.1% registered in May 2022.

Commercial building permits fell slightly in May, relative to their year-ago levels, but rose in month-on-month terms. By contrast, residential permits declined on a month earlier but were slightly higher on a year earlier.

In June, the number of promise-of-sale agreements rose on a year-on-year basis, while the number of final deeds of sales fell.

The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) stood at 6.2% in June, down from 6.3% in the previous month. On the other hand, inflation based on the Retail Price Index (RPI) edged down to 5.4%, from 5.7% in May.

In May, the Consolidated Fund recorded a higher surplus compared to a year earlier, as government revenue rose, while the timing of certain outlays on government initiatives contributed to a drop in expenditure.

Both Maltese residents’ deposits and credit expanded at a slower annual rate in May.