Business confidence recovers, consumers become more pessimistic
Tirana Times
TIRANA, Feb. 16 – Business confidence registered a turning point in the fourth quarter of 2010 as the industry and crisis-hit construction sectors became more optimistic about their futures. Meanwhile, consumer confidence continued dropping for the second quarter in a row as the big purchases and the expected economic and financial situation indicators registered negative rates, according to a central bank business and consumer confidence survey published this week.
Survey findings show the Economic Sentiment Indicator (ESI), measuring consumer and business expectations, grew by 1.6 percentage points in the final quarter of 2010 but still remained 7.2 percentage points below its long term historical average. The improvement was a result of 5.5 percentage point growth in the industry confidence index and a 7.3 percent increase in the construction sector which somehow compensated the drop in services and consumer confidence by 2.2 and 1.6 percentage points respectively.
Despite registering the highest increase, the construction sector confidence index remains 9.7 percentage points below its historical average. Construction companies expect the positive trend in demand, production and employment to continue even in the first quarter of this year. The construction capacity utilization rate in the fourth quarter grew by only 0.4 percentage points registering 63.5 percent, standing 4.3 percent below its historical average.
Meanwhile, the industry sector overcame its slight decrease in confidence in the third quarter of 2010, mainly because of the increased industrial production and employment.
Although the capacity utilization rate registered a slight 1.3 percent decrease to 68.7 percent, a majority of 87 percent of industry businesses think the current capacities are enough to meet orders in the contracts. Their expectations for the first three months of this year remain optimistic.
Differently from the third quarter when the services sector was the most optimistic, its confidence index at the end of 2010 fell by 2.2 percent but remained at historical average levels. The legal framework and its implementation, relations with banks, law and order, infrastructural problems and the tense political situation remain the main problems of this sector whose capacity utilization rate dropped by 2.9 percent compared to the third quarter, falling below its historical average. The main drawback for them to use their full capacities is insufficient demand and financial limitation because of not enough support with loans.
Meanwhile, consumers’ expectations of the employment rate for the first half of 2011 became more pessimistic with 36.8 percent of them expecting an increase and only 16.4 percent expecting the jobless rate to drop.
Business and consumer confidence registered an unexpected drop in the third quarter of this 2010 following a turning point of confidence boost about the economy reported in the first half. The deterioration was mainly influenced by a sharp drop of confidence in the crisis-hit construction sector. The industry and consumer confidence indexes also underwent modest drops. The services sector businesses were the only category showing signs of optimism, despite the confidence index registering a slight decrease compared to the second quarter of 2010.
