Business Confidence rises for both Construction and Manufacturing sectors

TIRANA, Dec. 5- The Centre for Research and Development published on Tuesday a report according to which the business confidence for the Albanian construction and manufacturing sectors rose in October on an annual basis. Compared to July, there was a slight fall in the construction sector but a steady increase in the manufacturing one, according to the survey prepared by the CRD, a local independent, non-profit organization. For the building sector, the confidence index measured minus eight points in October, up four points from October 2005, and down two points from July this year. Since April 2002, the index has been positive only twice – the first time in October 2003 when it measured five points and the second time – in April last year when it stood at four points. The survey included a list of problems and drawbacks that the industry is faced with such as insufficient demand, corruption in the public administration, incorrect implementation of the procurement laws and unfair competition from the grey economy. Moreover, a large part of the interviewed managers said a lack of building permits was the major setback for the sector’s development. This point was reinforced by a study released by the central bank of Albania that concluded that a lack of permits is artificially inflating apartment prices.
The October confidence index for manufacturing measured 11 points, up from six points in the same month last year and from the eight points measured in July. The reason for higher confidence in the Albanian manufacturing sector in October was higher than a year earlier due to rising orders and sales, improved energy supplies and infrastructure and reduced corruption in tax offices. In the list of drawbacks to the industry, the survey short listed: poorly drafted and applied fiscal laws, unfair competition and shortage of skilled workforce. The survey predicts that most of the investments in the sector next year will go to new technologies and into mechanization of existing operations. It also estimated that the business climate in the manufacturing sector will be positive in the fourth quarter of this year as well. The confidence indicator is based on several factors such as managers’ expectations about the actual number of orders in the sector, business activity forecasts for the next three months, an assessment of ready-made products, an assessment of production activity in the sector for the previous three months, employment forecasts, capacity utilization, sale prices assessments and assessments of export forecasts, of export orders, of production capacities, of orders for the past three months and of months of production.
The Centre for Research and Development has been releasing its confidence index quarterly since April 2002.The October survey is based on interviews with managers of 192 building companies in the regions of Tirana, Durr쳬 Vlore, Fier, Elbasan and Shkoder. Whereas for the manufacturing sector, the October survey was based on interviews with 319 manufacturing companies from the same regions.