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Services and trade boost trust in economy

THE CONTINUED fall in Slovakia’s economic sentiment ended in August, largely because of increasing trust in the economy with services and trade. Compared to the updated July data, the indicator’s three-month moving average grew in August by 0.2 points to 89.7, the Slovak Statistics Office said, adding that the indicator nevertheless remains 6.7 points lower than in the same period last year, and still below the long-term average by 15.6 points.

THE CONTINUED fall in Slovakia’s economic sentiment ended in August, largely because of increasing trust in the economy with services and trade. Compared to the updated July data, the indicator’s three-month moving average grew in August by 0.2 points to 89.7, the Slovak Statistics Office said, adding that the indicator nevertheless remains 6.7 points lower than in the same period last year, and still below the long-term average by 15.6 points.

Sentiment in retail contributed the most to the improvement, with Martin Baláž, analyst with Slovenská Sporiteľňa, saying that this was linked to “improved expectations of traders for the future, due to the fact that retail sales in the second quarter, after a longer time, increased year-on-year”.

Baláž however points to sentiment in industry, which worsened slightly, largely because of a fall in exports, which might be attributed to the “shift of vacations of the car-makers”. Attitudes in the construction industry remain significantly negative, he added.

The industrial confidence indicator fell in August by 1.4 percentage points to minus 5.7 points, which is 8.7 points below the long-term average. Confidence in this sector was affected mostly by the rising inventory of industrial products, which were the highest since January of this year. The positive trend of growing confidence in the construction sector stopped in August. Compared to the update for the previous month, this indicator fell by 0.5 points to minus 48.5 points, as a result of pessimistic evaluations of current demand prevailing over an optimistic outlook of expected employment, the SITA newswire reported.

According to Baláž, the development of sentiment indicators in the eurozone suggests further improvements of sentiment in industry and services, which also signal a larger increase in economic activity.

“This improvement of sentiment could be positively reflected in the upcoming months also in the economic sentiment of Slovakia,” Baláž said.

In August consumer sentiment worsened compared to July, mainly due to increased pessimism on expected savings and estimated development of the financial situation in households. The indicator dropped by 2.5 points to stand at -22.6 points. Yet, the statistics authority suggested that consumer optimism was still 3.3 points higher than a year ago, SITA reported.

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