Economic update 7/2017

Abstract

The Bank’s Business Conditions Index (BCI) signalled slightly below average activity levels in June. Economic sentiment rose marginally during the month, as improved sentiment in construction, industry and among consumers offset weaker sentiment in services and retail. In May, retail sales rose in annual terms. Tourism activity also expanded further. In contrast, industrial production decreased slightly on the corresponding month of 2016. Labour market conditions remained favourable, as employment grew and the number of registered unemployed continued to decline. Price pressures remained moderate, with the annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) at 1.1% in May and 1.0% in June. In May, Maltese residents’ deposits rose by 10.6% when compared with the same month of 2016, while credit to residents increased by 1.3%. As regards fiscal developments, the cash-based Consolidated Fund balance showed a small deficit in the first five months of 2017, as interest payments exceeded the primary surplus.