The European Commission’s monthly survey of households and businesses carried out in the first weeks of September confirmed that Malta’s households remained the most confident households found across the Euro area.
When asked about their financial situation over the next year, there was a majority of 7% of respondents that said that they believed it would improve. This was much more pronounced than the proportion observed on average across the EU, and in Germany. By contrast more than a third of Greek households expect their financial situation to deteriorate further, while a majority of 8% of Cypriots feel the same.
A majority of 14% of Maltese households said they feel they currently can make major purchases. By contrast, a majority of 17% of EU citizens said they cannot afford to make major purchases. In Greece and Cyprus well over a third of households cannot afford to spend at present. This sentiment is confirmed by data on retail sales which show that in August, growth in Malta was the highest around the EU. Retail sales were up by 20% in Malta, as against 1% in the EU. Retail sales in Malta are 10% than their pre-pandemic level, while those in the EU are just about the same as they were before COVID-19 struck.
A majority of 14% of Maltese households said they feel they currently can make major purchases.
Most European households are still worried about their economy. 5% more people expect their national economy to worsen rather than improve over the next year. In Greece, this negative sentiment is found among nearly a half of the population, while in Cyprus, the negative majority is of around a fifth of all families. In Malta, we have the exactly opposite economic sentiment.
Across Europe, the majority of households say they believe that unemployment will continue to rise, contrary to what Maltese and Gozitan families believe, as they expect the decline in unemployment to persist.
Beyond household sentiment, the Commission’s estimate of Malta’s economic sentiment index reached 112 in September. This is 12% better than the historical average and 26% better than the level that had been observed in September 2020. Moreover, this is the fourth highest level of economic sentiment expressed in the month of September since this survey began almost two decades ago. In all surveyed sectors, economic sentiment was positive and way better than the historical average.
A majority of 10% of the factories interviewed said they had experienced increased production in recent months. A majority of industry operators said they expect further growth in the coming months. So much so that these companies have stated that they have around six months of guaranteed production in orders they have already received.
A majority of 10% of the factories interviewed said they had experienced increased production in recent months.
The most optimistic sector were operators in the services sector. Until a few months ago they had been among the most pessimistic, with the pandemic wiping away most of their business. Now, by contrast, a majority of 6% of these businesses have reported an increase in activity in recent months. In addition, more than half of them expressed their opinion that demand will continue to rise in coming months. As a result, almost two thirds of these companies anticipate that they will need to hire more workers.
Optimism in the retail sales sector has also increased slightly in September, so much so that it is now better than the historical average, when a few months ago it had reached record lows. A quarter of those retail firms that were interviewed said they have had an increase in orders for the future, and almost one in six needs more workers.
In construction, a majority of one in five firms also claimed to need more workers. This is in a context that these operators have said they have a backlog of orders of more than eight months, or almost one and a half times the historical average.
This heightened level of confidence is very impressive, particularly as it comes before the Budget. One expects that economic sentiment will soar again after the new Budget measures come into play.