The economic climate improved in May, with the relative index standing at 111 points from 108.8 points in April, according to the results of economic situation surveys of IOVE.

As highlighted, the improvement comes from the business sectors, while the consumer confidence index is declining. Thus, at the sectoral level, there is a significant improvement mainly in Construction and Retail Trade and a milder one in Industry, while there is a deterioration in Services, with the exception of the Tourism sector where expectations are very optimistic.

The figures so far and the other indications for incoming tourism are particularly positive, a development that is expected to contribute with optimistic perspectives not only to the narrowest tourism sectors but also to those associated with them more broadly in the economy.

The slight slowdown in economic growth rates and the “tightness” faced by a large proportion of households for consumer goods and housing costs, amid a volatile European environment and open conflicts in Ukraine and the Middle East, has not led to a worsening of the economic climate, which is generally positive especially in terms of business expectations.

The results of the European elections could possibly affect the economic climate, especially if, as a whole, at the European level, it becomes apparent that it is difficult to deal with the challenges that are accumulating for the European economy in a coordinated manner and the questions about its medium-term prospects intensify.

In more detail:

– in Manufacturing, the negative balance of estimates for orders and demand eased slightly, estimates for inventories weakened slightly while positive forecasts for production in the coming months eased.

– in Construction, the negative forecasts for business work programs were significantly reduced, while at the same time the positive forecasts for employment were slightly strengthened.

– in Retail Trade, estimates for current sales are significantly strengthened, with the level of inventories decelerating slightly and forecasts for short-term sales development slightly strengthened.

– in Services, positive estimates for the current business situation improved slightly, while at the same time estimates for current demand are marginally strengthened with forecasts for the short-term evolution of demand weakening significantly.

– in Consumer Confidence, households’ negative forecasts for the country’s economic situation strengthened, while the corresponding ones for their own economic situation remained stable. On the contrary, forecasts for major markets improved slightly while the intention to save increased significantly.

Manufacturing: Slight strengthening of expectations due to a slight improvement in order forecasts

The Index of Business Expectations in Industry strengthened slightly in May to 109.2 points from 108.7 points in April. Of the index variables, the negative balance of estimates for orders and current demand narrowed, while the positive balance of forecasts for production in the coming months weakened slightly, as did the level of inventories.

Analytically:

a) The negative level of orders and current demand eased slightly to -8 (from -11) points in May with 23% of businesses reporting seasonally low orders and 15% (from 12%) reporting the opposite.

b) In the forecasts for the evolution of production in the next 3-4 months, the relative balance declined (+32 units from +38 units), but 40% (from 46%) of the companies foresee an increase in their production in the next quarter and only an 8% reduction.

c) In inventories of finished products, the relative balance weakens slightly (+8 from +11 points), with almost 1/5 of businesses reporting inflated inventories.

d) Export activity indicators recorded mixed trends: the forecasts for exports in the coming months fell sharply to +2 (from +22) points, while on the contrary the strongly negative estimates for orders and foreign demand were significantly reduced (-12 from – 20 units).

e) The employment forecasts index narrowed to +1 from +6 points in April, with the percentage of businesses predicting an increase in employment weakening to 14% (from 16%), and 14% (from 10%) expects its reduction.

f) The balance of forecasts for price changes strengthened slightly, with 17% from 11% the previous month expecting them to increase.

It is worth noting that the uncertainty about the economic environment recedes slightly, as in the question regarding the ease of predicting the future development of the business, in May 42% of businesses thought that it can be predicted difficult or relatively difficult, compared to 45% in April .

At the level of key sectors, the consumer goods expectations index strengthened slightly to 112.6 points (from 108.5 points). There was a small retreat in production forecasts for the next 3-4 months, while on the contrary mildly negative estimates for orders turned positive and inventories deescalated.

In Capital goods, the index fell significantly to 116.8 points, from 119.6 in the previous month. The decline in the index is due to strongly bearish forecasts for production over the next 3-4 months with inventories decelerating marginally and orders improving mildly. The intermediate goods index showed a slight decline, at 104.4 (from 106.0) points, with negative estimates for orders and demand remaining unchanged, production in the coming months weakening marginally and inventories remaining unchanged flat.

Marginal improvement in the economic climate index in the EU and Eurozone

The economic sentiment index in May strengthened marginally both in the EU and in the Eurozone. This development was a result of the strengthening of expectations in Services and Consumers with those in Construction and Retail trade declining, while expectations in Industry remained unchanged.

More specifically, in Industry the index changed marginally in May (-0.1), with estimates for orders and demand strengthening significantly and expectations for production in the coming months offsetting this increase, while inventories are maintained unchanged.

In Services expectations improved (+0.7), as estimates of current and future demand strengthened, as current state estimates remained stable. Retail trade weakened (-0.9), as pessimistic estimates of the current state offset optimistic expectations for the future state, as inventories remained essentially unchanged.

In Construction, the corresponding index, after three months of stability, weakened significantly in May, as a result of the significant decline in expectations of the level of orders, with forecasts for employment maintained at the levels of the previous month.

Finally, as regards consumer confidence, it strengthened slightly (+0.5) with households’ estimates of their current and future situation remaining unchanged, while their intentions for major purchases strengthened slightly and even more so their estimates of general situation of the country. Regarding the trends in the six largest economies, the index strengthened significantly in France (+1.5) and the Netherlands (+1.1), more mildly in Germany and Italy (+0.8), while it fell significantly in Spain (- 3.2) and Poland (-1.5).

In more detail:

– In Industry, the expectations index in the EU stood at -9.5 points and at -9.9 points in the Eurozone. Expectations for production over the next three months softened slightly in the EU and Eurozone, with orders and demand forecasts slightly strengthened, with inventories unchanged in both regions.

– In Services, the expectations indicators were +6.8 points in the EU and +6.5 points in the Eurozone. Firms’ estimates of their current activity fell markedly in the Eurozone, while they remained unchanged in the EU. Estimates of current demand strengthened in both zones, as did forecasts for its short-term development.

– In Retail Trade, the indices were formed at -5.9 units in the EU and at -6.8 in the Eurozone. Estimates for current business activity are weakening in both zones, sales forecasts are improving slightly in the EU and Eurozone, while inventories are climbing mildly in both regions.

– In Construction, the indicators of business expectations were formed at -8.1 points in the EU and at -6.0 points in the Eurozone. The positive forecasts for employment are strengthened slightly, while on the contrary, the negative forecasts for the level of work are intensifying.