Cyprus economic sentiment improves, but households grow gloomier

Economy cyprusresearchstatisticsTop News Cyprus economic sentiment improves, but households grow gloomier E Kalathi Reveals Cheapest Supermarkets With Price Gaps Reaching €156 Relevant News Court reserves ruling on Central Prisons documents case 31 July 2026 Cyprus economic sentiment improves, but households grow gloomier 31 July 2026 Defence Minister, National Guard chief apologise over Kalo Chorio firing range fire 31 July 2026 newsroom 31 July 2026 FacebookXWhatsAppEmailPrintViber Cyprus’s Economic Sentiment Indicator rose by 0.7 points in July 2026, continuing the upward trend of the previous two months, according to a survey by the University of Cyprus Economics Research Centre. The improvement came from stronger business climate in services and retail trade, mainly due to more optimistic expectations for turnover in the coming months. By contrast, sentiment fell in manufacturing, construction and among consumers. Households rated their current financial situation more negatively and scaled back their expectations for the months ahead. The Economic Uncertainty Indicator declined, driven by reduced uncertainty in services, retail trade and construction. However, consumer uncertainty rose for a second consecutive month, with lower-income households recording the sharpest deterioration. Above the long-term average Since May, the Economic Sentiment Indicator has stood slightly above its long-term average of 100 points. According to the survey, the improvement in economic confidence remains vulnerable to geopolitical developments in the Middle East and their economic consequences, particularly for energy prices and real incomes. Optimism over services turnover In the services sector, business climate strengthened due to more positive expectations for turnover in the next quarter. Businesses’ assessments of their recent financial situation worsened and turned negative, after nine months of positive readings. Assessments of turnover in the previous quarter stayed close to the low levels of the past three months. By contrast, expectations for turnover in the next quarter were revised significantly upward, reaching their highest level of 2026. Estimates for staff numbers in the next quarter improved marginally but remained at relatively low levels. Expectations for selling prices were revised downward. Third month of growth in retail trade Business climate in retail trade recorded a small improvement, mainly due to more positive expectations. Although assessments of sales over the last quarter were more negative compared with June, a reduction in inventories had a positive effect on sentiment. Sales expectations continued to rise for a third consecutive month, and estimates for orders to suppliers also improved. They remained, however, at negative levels for a fourth consecutive month. Employment estimates for the next quarter strengthened slightly, while expectations for selling prices held at June’s high levels. Marginal deterioration in construction In construction, business climate declined marginally, mainly due to worsening assessments of the current situation. Estimates for recent building activity stayed close to the previous month’s positive levels, but assessments of ongoing projects were slightly less favourable. Businesses’ expectations for staff numbers showed no substantial change. Estimates for selling prices fell for a second consecutive month, though they remained relatively elevated. Decline in manufacturing In manufacturing, business climate worsened both in terms of the current situation and expectations. Assessments of production over the last quarter fell to their lowest level since September 2022. Estimates for current orders remained at particularly negative levels, similar to those of June and among the worst of the past roughly two years. At the same time, stocks of finished products increased, a development that further weighed on sentiment. Businesses revised their expectations for next-quarter production downward. Employment estimates remained stable, suggesting relative stability in the short term. Expectations for selling prices stayed elevated, although slightly lower than the levels of March and April, which were the highest of the past three years. Consumer climate worsens Consumer climate worsened in July, after two consecutive months of improvement. Consumers rated both the recent and future financial situation of their households more unfavourably. Assessments of the country’s economic situation remained almost as negative as in June. Expectations for the labour market were also less optimistic, as the share of consumers expecting unemployment to rise increased slightly. Perceptions of price developments over the past 12 months showed some easing of upward pressures. Expectations for prices in the coming months were revised downward for a fourth consecutive month. Intentions for major purchases remained as negative as in May and June, while attitudes towards saving also stayed negative. Inflationary pressures persist Despite the decline in selling price expectations in services and construction, as well as a small reduction in the corresponding consumer estimates, expectations remained relatively elevated and above the historical average. According to the survey, this indicates that inflationary pressures may continue in the coming months. Manufacturing capacity utilisation at 62% Capacity utilisation in manufacturing continued its downward trend, standing at 62% in July, down from 65% in April. Despite the decline, it remained above the long-term average of 60%. According to the survey, the renewed decline indicates that demand for manufactured products continues to weaken, possibly due to recent inflationary pressures. Resilient demand in services In services, capacity utilisation remained unchanged at 83%, compared with a long-term average of 82%. This reflects the resilience of demand in the sector, despite the challenges created in recent months by the war in the Middle East. In the accommodation and food service sub-sector, capacity utilisation fell compared with April, reaching its lowest level since January 2025. In financial and insurance activities, the rate remained roughly stable since October 2025. By contrast, in professional and administrative activities it rose further, converging towards the level seen in the financial sector. The Economic Sentiment Survey is conducted by the University of Cyprus Economics Research Centre, in cooperation with RAI Consultants, as part of the European harmonised programme of business and consumer surveys. The project is funded by the European Union, the Ministry of Finance, and the University of Cyprus. Subscribe to our Newsletter Latest News Court reserves ruling on Central Prisons documents case Defence Minister, National Guard chief apologise over Kalo Chorio firing range fire Vyras accuses Government of stinginess over municipal funding Sooshi Mango bring ‘Home Made World Tour’ to Nicosia Police arrest 20-year-old over Limassol stabbing Xylophagou’s father request to travel to Bulgaria for children’s funeral delayed Unverified video shows Beitar fans attacking AEK supporter, days on from Larnaca clash Follow en.philenews on Google News and be the first to know all the news about Cyprus and the world.