Business and consumer confidence increases - Led by construction, trade and services
The economic climate in the country improved significantly during August, with confidence increasing in most sectors of the economy. The Economic Sentiment Indicator (ESI) increased by 1.8 points, positioning itself 7.4 points above the historical average.
According to data from the Bank of Albania, the improvement was led by construction, trade and services, while a positive contribution was also made by the increase in consumer confidence. On the other hand, industry was the only sector that held back the growth of the overall indicator.
Confidence in the construction sector recorded the strongest growth in August. The Construction Confidence Indicator increased by 4.7 percentage points, standing around 10.3 percentage points above the historical average. The improvement was driven by businesses’ more positive assessment of current construction activity and order books. Meanwhile, expectations for future prices continued to decline.
The trade sector also performed well. The Trade Confidence Indicator increased by 2.1 percentage points, remaining about 11 percentage points above the historical average. Businesses expressed more optimism about the current sales performance and employment expectations improved.
In services, confidence increased by 1.8 percentage points, about 7 percentage points above the historical average. The increase was supported by a higher assessment of demand and current business activity.
Unlike other sectors, industry recorded a decline in confidence. The Industry Confidence Indicator decreased by 1.2 percentage points in August. The decline was mainly driven by a weaker assessment of orders, while the assessment of actual production remained at the same level as in July. Despite the decline, confidence in industry remains 6.4 percentage points above the historical average.
Consumers also gave a positive signal. The Consumer Confidence Indicator increased by 0.8 percentage points in August and is now 2.2 percentage points above the historical average. According to the Bank of Albania, consumers have fully recovered from the decline in confidence recorded during the first two quarters of the year. The improvement was mainly driven by more positive assessments of large purchases, both current and expected.
Overall, August data paints a more optimistic picture for the Albanian economy, with most sectors continuing to perform above their historical averages. However, the weakening of confidence in industry remains an element to monitor in the coming months.
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