Economic sentiment in Malta last month dipped below its long-term average, dropping from a score of 102.8 in October to just 96.4 in November, according to the last economic update of the year published by the Central Bank on Wednesday.

However, Malta still scores higher than the Eurozone average of 93.8.

The Economic Sentiment Indicator is an index used by the European Commission to calculate confidence across several economic sectors, including industry, services, construction, retail and consumers.

Malta’s score for November 2023 is almost identical to what it was during the same month last year, before gradually growing throughout the year and peaking at a score of 119.9 in September. Malta’s long-term average score is of 100.

The dip is attributed to shrinking confidence in the services and retail sectors, both of which registered significantly lower scores than in previous months.

In contrast, confidence in construction and among consumers increased notably. This marked the first time since June that the construction sector did not register a negative score, rising from -11.9 in November to 2.8 a month later. Nevertheless, this remains lower than the scores registered in 2021 and 2022.

Data shows that the number of residential property permits in October increased by more than 140 over the previous month, but remained significantly lower than the same month last year. Commercial permits, on the other hand, are slightly higher than they were a year ago.

Confidence scores across many of the sectors measured tended to fluctuate significantly from one month to the next. However, consumer confidence scores buck this trend, with each month over the past year scoring negatively.

In practice, this suggests that consumers have held a fairly downbeat view of their financial situation over the past twelve months and are not expecting significant improvements over the next year.

Certainty increases, inflation dips

The economic update also reveals that uncertainty across several economic sectors is decreasing, suggesting that Maltese businesses are now better placed to predict their future financial situation.

Malta’s Economic Uncertainty Indicator score shrunk from 26.9 in October to 24.1 a month later. Uncertainty dipped across most economic sectors measured although, once again, the construction sector scored most strongly.

The update also offers comforting news, revealing that inflation has continued to dip, now falling under 4% for the first time this year. However, this isn’t true of all items, with food inflation increasing to 7.5% in November.