RO: Economic confidence dropped below long-term average
Economic Sentiment Indicator (ESI) plunged further to 99.6 in January from 102.3 in December on extreme consumer pessimism. Consumer confidence posted the sharpest monthly drop since the April 2020 lockdown. Lingering political uncertainty is likely to keep domestic demand at bay.
Local trends diverged from pan-European developments, with local ESI shrinking again in January after the politically driven drop from last December. Announcement of fiscal consolidation measures at the end of December, uncertainties related to rerun of presidential elections in May and an increase in consumer inflation expectations likely stood behind the drop in confidence.
Manufacturing confidence came at -2.3 in January vs -2.5 in December on higher production expectations. Quarterly survey of manufacturing shows capacity utilization lower at 67.8% in January 2025 vs 71.2% in October 2024 and well below the long-term average of 76.8%. Managers evaluation of order developments over the past three months deteriorated is January 2025 vs October 2024.
Services sentiment dropped to 4.8 in January from 6.0 in December on weaker demand expected by managers for the next three months.
Consumer confidence deteriorated significantly to -20.3 in January from -11.9 in December. Households assessed their past and future financial situation as worse. Intention to carry out major purchases at present and in the future deteriorated, with unemployment seen on the rise.
Retail trade confidence improved to 7.9 in January from 5.7 in December on positive assessment of business situation over the past three months by managers. On the other hand, the expectations component declined slightly.
Construction confidence was little changed at -6.0 in January vs -6.1 in December, with order books relatively flat.
Selling price expectations rose across the board in manufacturing, services, retail trade and construction.
Consumers price expectations for the next twelve months increased significantly in January.