In July 2023, the economic climate took a downturn, with the Economic Sentiment Index (ESI) dropping by 2.7 points compared to June. This decrease in the ESI was primarily driven by a decline in the business climate within the services sector. Additionally, there was a slight weakening of consumer confidence, contributing to the overall negative trend.

According to a press release by the Center for Economic Research at the University of Cyprus, the services sector's decline was a result of several factors. Businesses in this sector reported a worsened evaluation of their current economic conditions and business performance. Moreover, their expectations for the next quarter were revised downward, indicating a lack of optimism about future prospects.

On a brighter note, the retail trade climate remained stable at the levels seen in June. The businesses in this sector did not experience significant changes in their current conditions or expectations, which helped maintain a consistent climate.

In contrast, the construction sector saw an improvement in its climate. Businesses in construction reported more favorable views of their ongoing projects and even increased their estimates for the number of employees, indicating a positive outlook for this industry.

The manufacturing sector experienced further strengthening of its climate, primarily due to optimistic production estimates for the next quarter. This positive sentiment contributed to the sector's overall improvement in the economic climate.

However, on the consumer front, there was a slight dip in sentiment during July. Consumers revised their expectations downward for their households' future economic situation as well as the country's economic prospects. Despite this cautious outlook, consumers showed increased intentions to make significant purchases in the coming months, which might indicate a certain level of confidence in their personal financial situations.

It's worth noting that, across all sectors, the Economic Uncertainty Index saw a rise during July. This increase in uncertainty was observed among both consumers and businesses, highlighting the prevailing caution and hesitancy in the economic landscape.

As a result, the economic climate in July 2023 experienced mixed results, with certain sectors facing challenges while others showed signs of resilience and positivity. The overall picture suggests a cautious economic environment with both businesses and consumers closely monitoring developments.