ECONOMY

Economic climate index up for the fifth straight month

The economic climate in Greece improved further last month despite a deterioration in consumer confidence, the Foundation for Economic and Industrial Research (IOBE) said in a report released yesterday. The seasonally adjusted Economic Climate Index (ECI) rose for a fifth straight month in October to 98.7 from 98.3 in September. The improvement was based on a rise in the sub-indices of industry and retail commerce, while construction was marginally lower and consumer confidence receded 1 point. The services sub-index, which is not factored into the general index, also improved. Economic climate indices are calculated on the basis of particular sub-indices of expectations in industry, construction, retail commerce and consumer confidence. Industry Expectations in industry, measured in terms of the outlook for production and estimates regarding inventories and total demand, continued its improvement after July, rising from 102.9 points in September to 105.3 in October (base 100 for 1990) and edging closer to the June 2002 level. The development was mainly influenced by the prospect of liquidation of inventories and secondarily by more favorable production forecasts for the immediate future. Construction Business expectations in the construction industry, measured in terms of estimates for the project schedule and employment forecasts, edged down to 142.3 points from 143.6 in September (base 100 for 1990). More favorable estimates of the project schedule were offset by a less optimistic outlook for employment. Nevertheless, 50 percent of respondents continued to expect a rise in employment, while 5 percent of firms said they faced manpower shortages, compared to 2 percent in September. Retail commerce Expectations in the retail sector, measured on the basis of forecasts for sales and inventory levels, rose to 119.6 points from 116.7 in September (base 100 for 1993). More firms than before regard their inventories to be at below-normal levels, but most forecast higher employment forecasts. Some 86 percent expect stable prices in coming months. Services The services sector expectations index, based on views regarding the state of the business and demand forecasts, rose to 93.2 points from 92.9 in September (base 100 for 1998). Despite the improvement, demand is thought inadequate by a relatively large percentage of enterprises (38 percent), although there was a rise in the number of firms that think business is going well, from 37 percent to 39 percent. The index was lower in the sub-sectors of hotels and restaurants and travel agents, but higher in information technology and other services. The economic climate index improved in both the European Union and the eurozone for the third straight month in October, reaching 95.9 and 95.6 points respectively. The improvement was due to higher business expectations, while consumer confidence remained unchanged in both regions from September. A new country-weighting system for the indices at European Union and eurozone levels was introduced in August 2002.