Cyprus economic sentiment dips as services sector wavers

Cyprus’ economic climate weakened in February, as a downturn in the services sector weighed on overall sentiment, while economic uncertainty rose among consumers and most businesses, according to the University of Cyprus’ Economic Research Centre (CypCER).

The Economic Sentiment Indicator fell by 1.3 points compared with January, mainly due to a decline in services and, to a lesser extent, lower consumer confidence.

“The weakening of the climate in services was the result of more unfavourable assessments of the recent course of businesses, and specifically their financial situation and turnover,” the centre said.

At the same time, services firms appeared more optimistic about turnover in the next quarter, giving more positive estimates than in the previous two months.

By contrast, the business climate strengthened in retail trade, construction and manufacturing, supported by improved assessments of the current situation and higher expectations for activity in the coming quarter.

Consumer sentiment declined in February, as expectations regarding households’ future financial situation weakened and intentions to make large purchases fell.

However, assessments of the current financial situation of households remained “extremely favourable”, according to the survey.

Meanwhile, the Economic Uncertainty Indicator rose in February after four consecutive months of decline, reflecting increased uncertainty among consumers and businesses in all sectors except construction.

“In February, consumers, as well as businesses in all sectors except construction, faced greater difficulty compared to previous months in predicting their economic situation,” the report said.

Nevertheless, economic uncertainty in Cyprus remains relatively low, particularly among consumers and businesses in the services and construction sectors, it concluded.