However, around 39 percent of the respondents expect the unemployment rate to rise in coming months and only 20.6 percent of those surveyed think there will be less unemployment in the near future
TIRANA, August 17 – Albania’s consumer confidence index marked a turning point in the second quarter of 2010 ending its one-year declining trend as people became more optimistic about their economic futures, according to the latest survey by the Bank of Albania. Business owners and executives also had a more optimistic outlook.
The consumer confidence index increased by 6.3 percentage points during the second quarter of 2010 compared to the January-March period, standing at 5.8 percent above its historical average
Consumers’ expectations of the general economic situation and their current financial situation improved by 12.1 and 8.7 percent, respectively compared to the previous quarter but remained below their historical average. Consumers also perceived an increased cost of living during the second quarter.
Employment expectations for the remaining second half of the year remain negative despite a slight improvement compared to the previous quarter, when the economy grew by 2 percent and unemployment climbed to 13.83 percent.
Around 39 percent of the respondents expect the unemployment rate to rise in coming months and only 20.6 percent of those surveyed think there will be less unemployment in the near future.
The big purchases and saving situation balances remained negative despite a slight improvement.
Meanwhile, the Economic Sentiment Indicator (ESI), measuring consumer and business expectations displayed clear signs of improvement reaching 102.3 percent, 2.3 percentage points above its long-term historical average at a time when it had been registering negative rates since the last quarter of 2008.
The ESI increase was a result of a turning point in the confidence index of all surveyed sectors. The improvement in the consumer, services, industry and construction confidence indexes positively contributed to the overall ESI, said the survey.
Monitoring consumer confidence is a normal international practice which is done through interviews with consumers and business executives.
Industry sector
The industry confidence index registered a slight increase of 0.9 percentage points during the April-June period but continued remaining below its historical average. The increase was a result of the less negative estimate of the unemployment situation. The increase in inventories contributed negatively while businesses’ assessment of the industrial production remains at the same level of the first quarter.
The performance of industry businesses was negatively rated even during the second quarter, with its balance rate registering a 1.4 percent drop. The negative performance was affected by difficulties in finding new markets, the informal economy and problems with the legal framework and its implementation.
While domestic demand registered a slight improvement, the foreign demand further deteriorated compared to the first quarter. The capacity utilization rate in the industry sector increased to 69 percent but remained 2 percentage points below its historical level.
The survey says industry businesses expect domestic and foreign demand to improve in the third quarter of 2010.
Construction sector
The construction confidence index increased by 3.7 percent during the second quarter but remained 8.9 percentage points below its long-term average. Its improvement was mostly caused by the increase in demand by 7.6 percentage points and the production and employment balances which rose by 2.8 and 0.7 percent respectively, but remained negative. Companies said informal economy and lack of construction permits were the biggest obstacles to their normal activity.
The capacity utilization rate in this sector remained 69 percent, 3.3 percent more than the first quarter and 0.8 percent above its historical average.
Construction companies expect negative developments for the third quarter despite the increase in demand. Production prices are also expected to increase.
Service sector
The services confidence index increased by 3.7 percentage points in the April-June period, staying above its historical average for the first time since the last quarter of 2008. Its improvement was a result of increased estimates of economic performance and the employment situation in this sector.
However, service businesses reported lower economic activity and demand in the second quarter. This was mainly a result of lack of private and public managing policies, informal economy and infrastructural problems.
The capacity utilization rate in this sector was 76.9 percent, 9 percent up compared to the previous quarter and 1.2 percentage points above the historical average.
Service sector prices in the second quarter were slightly lower.
Service businesses expect the situation to deteriorate in the third quarter because of falling demand and employment in this sector.
