ECONOMY

Business expectations index continues gains in September

Greece’s general Economic Climate Index continued to rise in September, improving to 98.3 points from 97.8 in July, with strongly improved business expectations in the sectors of construction and, to a lesser degree, retail commerce. Industry, the third component of the general index (whose base is set at 100 for 1993), was less buoyant. Its business expectations index, compiled on the basis of prospects for production, estimates for the volume of stocks and total demand forecasts, rose to 102.9 from 100.9 in July (the index is not compiled in August). Orders are seen to be at marginally lower levels in the months ahead and stocks were estimated slightly higher, but production is forecast to rise. On the whole, enterprises considered their competitive position improved in the last quarter, both at home and abroad, and the outlook for exports better than in July. As regards consumer goods, capacity utilization rose to the highest level for the year, 80.1 percent, and there are optimistic forecasts for production and sales; 92 percent of firms predict stable prices for their products. Expectations regarding capital goods rose significantly in relation to July, with 56 percent of firms (33 percent in July) anticipating a rise in production in the next three months. Competitiveness is seen as likely to improve and 97 percent of respondents said they do not expect prices to change. Business expectations regarding intermediary industrial goods also improved to 104.8 points, probably due to the liquidation of stocks, and there is cautious optimism for production and sales. In construction, contrary to developments in the rest of the European Union, the business expectations index surged to 143.6 points in September, the highest level in the last 10 months, from 129.0 in July; 50 percent of firms forecast a rise in business in the next three months and 49 percent better employment prospects (from 29 percent in July). The number of months of guaranteed activity ahead rose to 16.9 from 15.3. In private construction, weak demand is feared as the most negative factor impeding business, according to 29 percent of firms (from 44 percent in July). In public projects, 53 percent of firms considered that construction activity is facing no impediments, compared to 24 percent in July. In retail commerce, the business expectations index rose to 116.7 points, the highest level for the year (112.1 in July), on the back of a significantly improved outlook for sales and liquidation of stocks in coming months; 43 percent of firms expect a rise in sales, more firms considered stocks as lower than normal and forecast an increase in orders, while employment in the sector is seen as remaining stable and more firms expect prices to fall. The improved confidence in retail commerce is accounted for by a surge in confidence in the household equipment and vehicles & spare parts branches, which offset a deterioration in expectations regarding foodstuffs and beverages, as one category, and textiles, clothing and footwear, as the other. Finally, in services (which are not taken into account in the compilation of the general business expectations index), confidence also reached the highest level of the year, 92.9, mainly influenced by improved estimates regarding the general state of enterprises and the sector’s demand outlook in the coming months.