ECONOMY

Economic climate index ends favorable run in December

The economic climate in Greece appeared to slide in December after six straight months of improvement, due to weaker consumer confidence and business expectations in construction and retail commerce, the Foundation for Economic and Industrial Research (IOBE) said in a report released yesterday. The seasonally adjusted Economic Climate Index (ECI) fell to 98.6 from 99.0 in November. There was no substantial change in the industry sub-index, while the climate in the services sector, which is not factored into the general index, improved further. 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, remained stable at 104.6 points in December, as in November, but down from 105.3 in October (base 100 for 1990). The stability is due to the fact that the positive contribution of marginally improved estimates regarding new orders and prospects for liquidation of inventories was offset by rather cautious forecasts for production levels in coming months. The average of the industrial sub-index for 2003 was 101. Construction Business expectations in the construction industry, based on estimates on the progress of scheduled projects and employment forecasts, continued the slide of recent months, reaching 125.3 points from 139.9 in November (base 100 for 1990). The deterioration is mainly due to fewer firms (32 percent) predicting a rise in employment in the sector. In public works, the number of months of guaranteed work ahead fell to 17.7 from 18.4 percent in November. The 2003 average for the construction sub-index was 133. Retail commerce Expectations in the retail sector, measured on the basis of forecasts for sales, inventory levels and business activity, fell to 114.4 points from 122.3 in November (base 100 for 1993). The majority of firms considered current sales levels to be stagnant and inventories likely to increase in the near future. Nevertheless, the index remained above the 110.8-point year average. Services The services sector expectations index, based on views regarding the business climate and demand forecasts, continued its gradual ascent since May, surging to 100.6 points from 94.8 in November (base 100 for 1998). The improvement was mainly due to the fact that the percentage of firms forecasting a growth in demand levels in coming months reached 40 percent, the highest for the year. Also, the percentage of firms facing problems due to weak demand fell from 33 in November to 27 in December. The average for 2003 was 84.7. The economic climate index declined slightly in both the European Union and the eurozone after a steady improvement since the summer, reaching 96.2 and 95.6 points respectively (base 100 for 2000). An improvement was only observed in Germany and Luxembourg, while Belgium, Ireland, Sweden and the UK reported no change from November. A new country-weighting system for the indices at European Union and eurozone levels was introduced in August 2002.