Bank of Albania (survey): Business and consumer confidence increased during 2014

Business and Consumer Confidence Survey for 2014

The consumer confidence index rose to a record high during 2014 on the back of a continued economic recovery, a survey conducted by Bank of Albania showed on Thursday (October 16). The following article shows the official data published by Bank of Albania.

Economic Sentiment Indicator

Economic Sentiment Indicator (ESI) improved by 3.7 percentage points in the third quarter of 2014. Currently, ESI stands at 100, which is its long-term average. The positive developments in this indicator were determined by the improved confidence in industry, construction and services sectors, and the improved consumers’ confidence in the third quarter. Conversely, the downward confidence in the trad sector provided negative contribution to ESI’s improvement.

Industry

Industry Confidence Indicator (ICI) improved by 0.9 percentage points in the third quarter. In this quarter, the ICI remained above its long-term average (by 6.5 percentage points), and around 9.4 percentage points above the past five years’ average. The improvement of the financial situation balance and the reduction of inventory stock contributed to overall ESI’s improvement. However, the balance of production, which has trended up since the second quarter of 2013, contributed negatively to ESI’s improvement in this quarter.

Following is an analysis of selected indicators not included in the construction of the ICI:

The overall economic situation improved during the third quarter of 2014. Its respective balance increased by around 8.2 percentage points. Firms operating in the industry sector reported improved economic activity of their firm during the quarter under review. Domestic demand was assessed as slightly up during the current quarter (+0.6 p.p.). Foreign demand, however, was assessed as slowing down from the previous quarter (-3.6 p.p.), although its balance remains positive. Firms operating in the industry sector assess production prices as upward in the third quarter of the year. Capacity utilisation rate in industry stood at 74.32%, improving by around 2.7 percentage points from the  previous quarter, being above its long-term average. The level of investments in industry fell compared to the year start.

Construction

Construction Confidence Indicator (CCI) improved slightly by around 2.8 percentage points in the third quarter. This indicator has been improving since the first quarter of 2014. Currently, the CCI stands about 4.5 percentage points below the long-term average, but 7.6 percentage points above the average of the past five years. The CCI improved thanks to the improvement of its three constituent balances. Thus, the firms’ assessment of the current situation of demand, production and employment improved by 3.6, 2.8 and 2 percentage points, respectively, from the second quarter.

Following is an analysis of selected indicators not included in the construction of the CCI:

The overall economic situation in Albania and firm’s overall situation improved in the third quarter. The stock of available housing units was assessed as slightly higher during the period, while the financial situation of businesses was assessed as downward. Producer prices in construction were assessed as upward in the third quarter. The capacity utilisation rate in the construction sector stood at 57.9%, up around 1.3 percentage points from the first quarter, but around 7.4 percentage points below the historical average. Firms in the construction sector assess the level of investments as downwards compared to the first quarter.

Services

Services Confidence Indicator (SCI) increased 0.4 percentage points in the third quarter. Since the fourth quarter of 2013, the SCI has been trending up and currently stands around 1 percentage point above its  all-time average. In the third quarter, the SCI increased driven mainly by the increase in the balance of overall business situation (+1 percentage point). The contribution of the other two components was insignificant; namely the balance of demand and financial situation increased by 0.1 percentage point.

Following is an analysis of some indicators that are not included in the construction of the SCI:

Service sector enterprises have assessed Albania’s overall economic situation as improving, with the respective balance increasing by 3.1 percentage points. Expectations for this situation, though higher than the assessment for the current situation, are downward from the second quarter. Meanwhile, firms’ expectations are more optimistic about the situation of their business in the fourth quarter; the respective balance surged by 18 percentage points.

Firms assess the prices of their services as slightly up during the third quarter. The balance of prices in services has recorded a downward trend in the last two years.

Firms have used 76.1% of their capacity, approximately at the same level of the long-term average of this indicator. The balance of new investments during the last six months improved, after the pronounced hike in the fourth quarter of 2013. Currently, the value of this balance stands significantly higher than its long-term average.

Trade

The Trade Confidence Indicator (TCI) fell by around 5 percentage points in the third quarter, affected negatively by the drop in the balance of firm’s situation and balance of employment. The third component of the indicator, the financial situation, did not change from the level it recorded in the second quarter.  The TCI level, which increased in the last three quarters, stands 4.4 percentage points above its long-term average.

Following is an analysis of some indicators not included in the construction of the TCI:

The overall situation of the economy is assessed as improved by firms operating in the trade sector. Its balance surged 10.5 percentage points from the second quarter. The assessment for demand in this sector improved; the balance changed +6.3 percentage points in the third quarter from the second one. The balance of prices was assessed as being up from the past quarter. The balance of new investments fell compared to the previous six months. Capacity utilisation rate in trade is 79.2%, around 1.5 percentage points higher than in the previous quarter. Currently, this rate stands very close to the long-term average.

Consumer Confidence

Consumer Confidence improved in the third quarter of 2014, being upward for two consecutive quarters. Consumer Confidence Indicator (CCI) was up by 5 percentage points, after having increased 2.4 percentage points in the second quarter. Currently, the CCI stands at 3.5 percentage points above the long-term average. The CCI increased mainly driven by the improvement of the balance of expectations for the consumers’ financial situation and improvement of the balance of major purchases. The balance of expectations for the overall situation of the economy was almost unchanged from the previous quarter, whereas the balance of income-expenditure fell in this quarter.

Following is an analysis of selected indicators not included in the construction of the CCI:

Consumers’ expectations on unemployment six months ahead are almost unchanged from the previous quarter. Overall, the balance of unemployment has been trending down from the first quarter of 2013 (the decline in this balance points to downward expected unemployment). Inflation expectations were slightly up in the third quarter, posting 1.6% from 1.3% in the first quarter. Compared to the long-term average, inflation expectations stand 0.5 percentage point lower. Consumers report an improvement of the  situation of savings in the third quarter.

News source & photo credits: Bank of Albania / Flickr – Barbara