IOBE: Slight increase in the economic climate index, with a slight improvement in consumer confidence

The economic climate index remained on an upward trajectory in November and stood at 113.4 points (from 112.4), the same level as in February 2020, ie before the pandemic. By contrast, the economic climate in the Eurozone and in the wider EU has deteriorated slightly. The boost came mainly from the new significant improvement in business expectations in Services, at the highest level in the last 20 years, while the change in industry is marginal. On the contrary, expectations deteriorated in Retail and Construction. The expansion of the tourist season and the non-imposition of strong restrictive measures, despite the intense outbreak of the pandemic, seem to have given impetus to the services sector. The industrial sector continued to benefit from the significant recovery of the world economy and international trade. The improvement of the consumer confidence also contributed to the improvement of the economic climate, after a five-month deterioration. The recent negative trend is being offset in part as households move into an environment of continuing uncertainty but without significant new constraints. Developments on the pandemic front and the consequent effects on the economy, in our country and in the European context, are expected to strongly affect the expectations of businesses and households in the coming months.

The role of the growing inflationary pressures, as well as the priorities in fiscal and wider policy, will also be crucial, as the economy must move from the deficit area to that of surpluses.

In more detail:

– In industry, the mildly positive balance of estimates for orders and demand fell slightly, inventories for stocks escalated slightly and positive output forecasts for the coming months changed slightly.

– in Construction, the negative forecasts for production slightly increased, while at the same time the forecasts for employment deteriorated.

– In Retail Trade, estimates for current sales fell sharply, with inventories escalating sharply, while positive forecasts for short-term sales weakened significantly.

– in Services, positive assessments of the current state of the business remained high and strengthened slightly, as did those of demand, while forecasts for short-term demand declined slightly.

– in Consumer Confidence, the negative forecasts of households for the economic situation of the country weaken slightly as the corresponding ones for their own financial situation within a year, while at the same time the estimates for major markets are improved and the intention for savings is strengthened.

See the IOBE report in the “relevant files” column

* Eurozone: New improvement in manufacturing PMI, but inflationary pressures remain