Cyprus’ economic climate strengthened in October, driven by a boost in the services sector, according to the University of Cyprus’ Economics Research Centre (CypERC).
The centre also reported that economic uncertainty eased as well, reflecting a shift in both consumer and business sentiment.
“The significant improvement in sentiment and the simultaneous decline in uncertainty reflect positive developments in recent months,” the latest data showed, with these improvements combining notably in October.
This shift has mainly impacted demand in the services sector, while other sectors and consumer confidence have shown less marked change.
According to the CypERC, the Economic Sentiment Index (ESI) rose by 4.7 points from September, driven by the strengthened services sector.
Explaining this upward trend, the centre explained that “the significant rise in services sentiment in October was the result of more positive responses from businesses about their recent economic situation, particularly their turnover in the last and next quarter”.
Construction sentiment improved slightly, as firms revised their employee estimates upward and assessed ongoing projects more favourably.
By contrast, the manufacturing sector saw a drop in sentiment, attributed to “less favourable assessments of current orders and current stocks of finished goods, as well as more pessimistic estimates of production in the next quarter,” the centre noted.
Meanwhile, retail trade sentiment eased marginally in October, reflecting a slight downward revision of expectations for next quarter’s sales.
Consumer sentiment also saw a minor dip, with households reporting a slightly more cautious outlook on their economic situation.
Despite this, “consumers’ intentions to make large purchases in the coming months strengthened in October,” the centre stated.
Uncertainty showed a continued decline across sectors, with services seeing the most pronounced reduction.
This marked the second consecutive month of easing uncertainty; however, CypERC stressed an increase in uncertainty among consumers.
“Households in the middle 50 per cent of the income distribution found it increasingly difficult in October to forecast their financial situation,” the centre observed.
It concluded by saying that households in the lowest income bracket continued to face “the highest levels of uncertainty”.
