Economic Sentiment for May stable in both Eurozone and EU

The European Commission has said that the Economic Sentiment Indicator (ESI) has remained unchanged in both the euro area (at 103.8) and the EU (at 106.4).

In a statement, the Commission said that the stabilisation of euro-area sentiment had resulted from increasing confidence in the services, retail trade and construction sectors, being offset by consumer confidence decreasing for a second month in a row.

The government has issued a statement in reaction to this data, where it pointed out that Malta has the highest level of optimism amongst euro countries for the twelfth month in a row.

The statement explained that the index had reached 118, which is 18% higher than the average reached since the indicator started being measured.

“This optimism level is the highest Malta has had since the beginning of the crisis in 2008,” the government added.

It explained that this month presented the second consecutive month, since the index was compiled, that Malta registered optimism in all sectors. The government further pointed out that a general improvement in optimism levels had been notes since the beginning of 2015, with many manufacturing companies insisting they have increased production in recent months and that they will subsequently be hiring more workers.

This, the government said, is highly contrasting with the rest of the EU, where pessimism reigns supreme. In fact, the Commission’s report shows that confidence in industry edged up only marginally compared to the last month, with sentiment improving slightly in the largest euro-area economies, the Netherlands  (+0.9), France  (+0.7) and Germany (+0.5). Sentiment in Italy on the other hand, declined slightly (- 0.4) but it remained unchanged in Spain.

The overall marginal improvement in industry confidence (+0.2) was attributed to managers' more optimistic production expectations, which slightly  outweighed their worsened assessment of stocks of finished products; views  on the  current  level  of  overall  order  books remained broadly stable.

The government’s statement showed that Maltese service operators were showing the highest confidence levels in the last five years and that they expected their situation to improve given that they could even employ more workers in the near future. Furthermore, these companies also enjoy the highest optimism levels amongst EU service operators, where the meagre improvement in services confidence (+0. 8) was attributed to managers' brighter demand expectations and their significantly better assessment of the past business  situation.

The government also pointed out that Maltese families were among the few that felt that their situation was improving and expecting their situation to get better in the coming months. The statement added that families were so optimistic that they were expecting significant drops in unemployment levels although they are already at a historic low.

Consumer confidence in the rest of the EU on the other hand has weakened (-0.9) due to worse assessments  of the future general economic situation,  future unemployment and  future savings , while consumers'  expectations of their financial situation remained broadly unchanged .