During the first quarter of 2017, the economic sentiment indicator fell marginally to 113, from 114 in the last quarter of 2016,4 but remained above its long-term average of 100.
This was revealed in the Central Bank's Quarterly Review published last week.
A decline in sentiment in construction, services, and industrial sectors as well as among consumers, more than offset a significant improvement in the retail sector.
Confidence in the construction sector remains negative
Sentiment in the construction sector deteriorated during the first quarter of 2017, with the confidence indicator falling to -4, from -2 in the preceding quarter. Although the overall construction confidence indicator remains well above its longterm average of -22, it has been negative for five consecutive quarters.
This was largely driven by firms' assessment of order books. This component also explains the fall in construction confidence during the first quarter of 2017.
In contrast, employment expectations for the subsequent three months were more optimistic. Additional survey data indicate that in the first quarter of this year, more respondents have on balance, reported positive building activity developments during the preceding three months.
Also, more firms expected selling prices to rise in the subsequent three months.
Confidence in the services sector weakens slightly
In the first quarter of 2017, the services confidence indicator fell to 27, following an increase to 29 in the fourth quarter of 2016. Notwithstanding this decline, it still compared favourably with a long-term average of 22.
The fall in confidence in the services sector in the quarter under review was solely driven by respondents' expectations of demand for the following three months. On the other hand firms' assessment of their business situation over the preceding three months improved marginally. Their assessment of past demand however, was unchanged.
Additional survey data indicate that a larger net share of respondents reported higher employment in the preceding three months, while a smaller share of firms expected employment to increase in the following three months.
On balance, firms expected prices to rise in the following three months. Industrial confidence stabilizes at a high level
Confidence in the industrial sector also remained above its long-term average, despite falling marginally to 7 in the first quarter of 2017, from 8 in the preceding quarter.
Positive sentiment in the first quarter of 2017 was entirely due to favourable production expectations. This outweighed persistently weak order books and above-normal stocks of finished goods.
The marginal reduction in industry sentiment during the quarter under review was driven by firms' assessment of order books, which fell significantly when compared with the preceding three months.
In contrast, stocks of finished goods were less pronounced and production expectations within the industry improved between the two quarters.
Meanwhile, additional survey data suggest that more respondents expected to increase their labour complement in the subsequent three months. At the same time, on balance, fewer respondents expected to decrease their selling prices.
Consumer confidence remains mildly positive
The consumer confidence indicator edged down to 2 in the first quarter of 2017, from 3 in the preceding three-month period. However, it still remained well above its long-term average of -20.
During the quarter under review unemployment was foreseen to fall more slowly compared with the last quarter of 2016.
Also, a smaller share of respondents expected an improved general economic situation in the subsequent 12 months. These offset slightly more favourable savings expectations.
Meanwhile, respondents' expectations of their financial situation remained unchanged. Additional survey data suggest that the share of consumers intending to reduce major purchases over the subsequent 12 months decreased.
The survey also indicates that, on balance, consumers' inflation expectations increased substantially in the quarter under review.
Confidence in the retail sector increases
Sentiment in the retail sector increased for the first time in almost two years. The retail confidence indicator rose from 0 in the fourth quarter of 2016, to 8 in the first three months of 2017.
Firms in this sector continued to express a favourable assessment of past and expected business activity, with both indicators increasing between the two quarters under review. However, on balance respondents continued to assess stock levels to be above normal, with the share of respondents expressing this view broadly unchanged from that in the preceding quarter.
Additional survey data indicate that selling prices are expected to fall during the three months ahead, while on balance, a marginally smaller share of respondents expected employment to increase.