The Economic Sentiment Indicator (ESI) in Cyprus showed notable improvement in November compared to October 2023. This rise is mainly attributed to a bolstered business sentiment in the services and construction sectors. This insight comes from a survey by the Economic Research Centre (ERC) of the University of Cyprus, in partnership with RAI Consultants Ltd.

In detail, the ESI saw a 2.6-point increase from October. Concurrently, the level of economic uncertainty continued its downward trend in November. This decrease was primarily due to reduced uncertainty in the services sector. However, this period also witnessed heightened uncertainty in other sectors, particularly retail trade. Similarly, a slight increase in consumer uncertainty was observed.

Specifically, the ERC attributes the surge in the Services Confidence Indicator to substantial enhancements in firms’ evaluations of their recent performance, including business situation and turnover. Additionally, there was a minor increase in demand expectations. The Construction Confidence Indicator also rose, driven by improved assessments of current order book levels and more optimistic employment expectations.

The Retail Trade Confidence Indicator, however, remained stable at the October level. In November, positive changes in firms' perceptions of recent sales and stock levels were counterbalanced by a decline in sales expectations.

A decline in the Industry Confidence Indicator is also highlighted. This downturn is linked to more negative perceptions of current order books and future production prospects, particularly in manufacturing. This sector experienced a downturn due to increasingly negative views on current orders and a more pessimistic outlook on future production.

Finally, consumer sentiment in November was less pessimistic compared to October regarding future labor market conditions. Despite this, a significant portion of consumers still anticipates a rise in unemployment.

Regarding price developments over the past year, consumers noted some relief from upward pressures for the second consecutive month, suggesting a gradual stabilization in this area.