Economic sentiment sinks to lowest level in 18 months
The mood regarding the economy in Greece is at its gloomiest in the last 18 months as the uncertainty over the future grows and fears of the worst are far from banished, according to a survey on economic sentiment by the Foundation for Economic and Industrial Research (IOBE) published on Tuesday.
The Economic Sentiment Index stood at 91.4 points in May, dropping to the lowest point since December 2013, while in April 2015 its reading was 92.7 points.
The business expectations index posted a mild increase in May to reach 87.2 points against 84.6 points in April but this compares with 95.1 points in May last year. Still, expectations regarding the course of exports in the coming months are deteriorating.
There are similar conclusions to be drawn from the Purchasing Manufacturers Index (PMI), which posted a small rise in May to reach 48 points from 46.5 points in April, but the fact that the index remains below the break-even level of 50 points highlights that the sector remains in recession. As Markit, the index compiler, notes, new orders from abroad declined at a rapid rate last month.
The optimism generated among consumers after the January election has now turned into worry and anxiety, forcing the consumer confidence index ever lower: It declined for the second consecutive month in May to -43.6 points from -40.5 points in April. The expectations of an improvement in the country’s financial conditions within the next year along with an increase in employment have now been cast aside as the negotiations with the country’s creditors have lasted far longer than anticipated. There is a similar situation in the service sector, as the domain’s index of business expectations dropped to 70 points last month from 73.5 points in April.
In the construction sector expectations also dropped to 57.5 points in May from 59.7 points a month earlier, which is attributed to the strong deterioration in expected employment levels that offsets the increase in the forecast activity of the companies.
