ECONOMY

Mixed picture seen in June economic sentiment surveys

Consumers and businesspeople have shown a mixed reaction to political and economic developments in June, with economic sentiment staying virtually unchanged, business expectations and consumer confidence declining, and the manufacturing index going up.

The economic sentiment survey conducted monthly by the Foundation for Economic and Industrial Research (IOBE) showed a minor decline from 93.8 points in May to 93.5 last month, with sectoral indices presenting a mixed picture: Business expectations in industry fell after five months of growth to 88.8 points from 92.6 in May.

In contrast, business expectations in the construction sector kept growing for a third month, rising to 69.5 points from 65.7 in May. This is the highest level since end-2009. The rebound is attributed to the forecasts for an increase in employment in public works as they are gradually restarting. Once the European Commission has approved the state’s agreement with the contractors – expected in the next few weeks – all public works will have restarted.

In retail commerce the business expectations index dropped significantly from 79.5 points in May to 73.5 points in June, mostly because the negative sales forecasts are deteriorating. The service sector however soared 10 points to 79.2 within one month, which is the highest since May 2008 and is due to optimistic expectations mostly for the hotels and restaurants sector.

The reserved optimism among entrepreneurs is reflected in the Markit research company’s manufacturing index (PMI), which in June rose to 45.4 points, the highest in the last couple of years but still lagging the 50-point level of 50 that denotes the border between growth and contraction.

The recent government crisis combined with the recessionary economic environment resulted in a three-point decline in consumer confidence to 66.5 points, according to the IOBE survey. Three-quarters of respondents expect their financial situation to deteriorate in the next 12 months, with 63 percent saying they can hardly make ends meet.

Another survey, by the Athens Chamber of Commerce and Industry (EBEA), has found that the majority of citizens (63 percent) believe that the new two-party government will not be any more productive than the previous one.