Foundation for Economic & Industrial Research (IOBE): Construction and services strengthened the economic climate index in Greece

The economic climate index in Greece strengthened in September to 105.1 points, higher than in July and August (101.8 points), but lower than last September, according to the Foundation for Economic & Industrial Research (IOBE).

At the European level, downward trends prevailed, both in the Eurozone and more broadly in the EU.

Business expectations fell slightly in Manufacturing and Retail trade, while expectations improved in Construction and Services.

The improvement in the index mainly reflects an upward “correction” in the consumer confidence index, which had declined very sharply and systematically in the previous period. After all, Greek households remain the most pessimistic in Europe in September as well and the basis of comparison is low.

Also, the positive course of tourism, with which many Greek households are directly or indirectly connected, seems to have boosted the prospects of the winter season to some extent, while the subsidized support policies, in energy but also in other sectors, seem to have an effect. In the business sector, mobility exists mainly in the construction sector but also in the relatively heterogeneous area of ​​Various Business Services (such as in advertising, consulting and other services), as several projects of the Recovery Fund and the NSRF are at or nearing maturity. In any case, the uncertainties for the next period are still extremely strong, as both economic and geopolitical risks are high in the European environment.

In more detail:

– in Manufacturing, the negative balance of forecasts for orders and demand was slightly strengthened, estimates for inventories were scaled back and positive forecasts for production in the coming months fell sharply.

– in Construction, the negative forecasts for production strengthened, while on the contrary the forecasts for employment improved significantly.

– in Retail Trade, estimates for current sales fell significantly, with the level of inventories escalating sharply, while forecasts for short-term sales development are mildly changed.

– in Services, the positive estimates for the current business situation moved strongly upwards, as did those for demand, while forecasts for the short-term development of demand changed only slightly upwards.

– as concerns Consumer Confidence, households’ negative forecasts for the country’s economic situation showed a significant softening, as did the corresponding ones for their own economic situation, which declined more gently. At the same time, forecasts for major markets worsened slightly and the intention to save improved marginally.

Industry: Further deterioration of expectations, sharp decline in production in the coming months

The Index of Business Expectations in Manufacturing fell again in September to 98.2 points from 101.2 points in July, the lowest performance in 20 months. Of the index variables, the negative balance of estimates for orders and current demand strengthened slightly, the level of inventories decelerated, while the positive balance of forecasts for production in the coming months weakened sharply.

Analytically:

a) At the level of orders and current demand, the relative index moved downwards and stood at -9 points, from -6 points in July, with 21% of businesses declaring low orders for the season and 12% (from 17%) to state the opposite.

b) In the forecasts for the evolution of production in the next 3-4 months, the relevant balance also moved strongly downwards and is now balanced (from +18 points), with 20% (from 27%) of companies predicting an increase in production of the next quarter and an equal 21% (from 9%) reduction.

c) In stocks of finished products, the relative balance shows a noticeable de-escalation and was formed at +5 (from +18) points, with 25% of companies reporting high stocks for the season and 19% (from 8%) stating the opposite.

d) Export activity indicators recorded mixed trends in September: positive estimates for exports in the last quarter strengthened further to +19 (from +7) points, but negative estimates for orders and foreign demand turned positive (+ 7 from -3 points), while on the contrary, the positive forecasts for exports in the coming months turned negative and formed at -4 points (from +21).

e) Positive forecasts for sales in the coming months declined slightly, with the balance being +19 points from +23 with 31% (from 29%) of businesses expecting an increase in sales in the near future, while 13% (from 5%) expect a decrease. On the other hand, however, the positive estimate index for current sales strengthened to +27 (from +16) points, with 38% (from 30%) of respondents predicting an increase.