Annual growth in business activity slightly below long-term average, CBM says

The Central Bank of Malta’s Business Conditions Index indicates that in August, annual growth in business activity was broadly unchanged from July and remained slightly below its long-term average.

Both the European Commission’s economic sentiment indicator and the employment expectations indicator for Malta increased in August but remained below their long-term average. Price expectations decreased across all sectors, except among consumers. The largest decreases were recorded in the services and retail sectors, the Central Bank said Wednesday.

Developments in activity indicators were mixed. In July, both industrial production and retail trade contracted on a year earlier. In June, services production accelerated on a year-on-year basis. Unemployment remained low from a historical perspective. It fell marginally when compared with the preceding month and remained unchanged from a year earlier. In July, residential permits were below their year-ago level.

In August, the number of residential promise-of-sale agreements was above those of a year earlier, while the number of final deeds of sale were lower. During the 12 months to July, annual growth in Maltese residents’ deposits, forming part of the broad monetary aggregate M3, accelerated.

Annual growth in credit to Maltese residents, though remaining strong, moderated when compared to the preceding month, reflecting slower increases in lending to general government and other residents. In August, the annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) rose marginally to 2.4%.

While overall inflation in Malta exceeded slightly the euro area average, HICP inflation excluding food and energy stood at 2.3% – well below the corresponding rate in the euro area. According to the Retail Price Index (RPI), inflation in August rose slightly to 1.5% from 1.4% in July. In July, the Consolidated Fund recorded a surplus as an increase in government revenue was complemented by a decline in government expenditure. This marks an improvement when compared with a deficit a year earlier.

The full Economic Update is available here