The monthly survey carried out by the European Commission among businesses and consumers across all European Union countries indicates that, during December 2023, Malta saw an upsurge in economic sentiment that was much better than that in across the rest of the Union.
In fact, the Commission’s economic sentiment index for Malta had a value of 104, which was 4% above the country’s historical average. In contrast, across Europe confidence is 4% lower than the historical average. This difference undoubtedly reflects the different impact that the rise in energy prices is having in the rest of the Europe. Overseas, high energy and fuel prices are hampering the economic prospects of several companies and preventing households from having enough financial resources to spend on the products and services they desire. Instead, they must cut down spending to pay bills.
In contrast, in Malta the feeling among consumers is almost in line with the historical average. The Commission’s survey indicates that there is little anxiety over the state of the labour market while consumers are predicting that, in the coming months, they will be able to spend more than they are currently spending. This is in stark contrast to the situation across Europe. At the same time, Central Bank of Malta statistics indicate that in November households in Malta had a record level of deposits saved with banks. These deposits, in fact, reached €16.8 billion, or almost €700 million more than a year earlier.
The stable financial situation of families in Malta is reflected in the upbeat sentiment displayed by retailers. According to the Commission survey, this is above the historical average. A majority of surveyed Maltese retailers have reported rising sales in the last three months, and they predict that sales will increase even further in the coming months. This supports statistics released by Eurostat recently that indicate that retail sales in Malta rose by 5% in November compared to a year ago, while across the EU there was a 1% drop.
The Commission survey shows that, while operators in the construction sector in Malta displayed a decline in sentiment compared to previous months, they still reported that they have orders to guarantee almost 5 full months of production.
In industry, by contrast, current orders are sufficient for an unprecedented 15 months of production. This follows a recent increase in new orders, which has led to sentiment among manufacturing operators rising well above its historical average. A majority of the factories interviewed said that they will need to add more workers in view of the expected increase in production in the coming months.
In services, most firms reported a sharp increase in activity in recent months and they predicted that this trend would continue. As a result, a majority of 40% of Maltese businesses in this sector will be seeking to increase employment.
This increase in labour demand comes in the context of a situation of very low unemployment. In fact, Eurostat has indicated that in November Malta’s unemployment rate stood at a historical low of 2.5%.