Issue link: https://maltatoday.uberflip.com/i/737583
maltatoday, WEDNESDAY, 12 OCTOBER 2016 11 Business Today www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Central Bank study anticipates increase in property prices Economic update shows an increase in building activity and anticipates higher selling prices The Central Bank's latest eco- nomic update shows that overall economic sentiment improved in September, driven by a more fa- vourable assessment by all sec- tors except construction, where sentiment remained unchanged. Following a sequence of negative readings, sentiment in the construction sector rose to zero in August and remained at that level in September. Sentiment remained well above its long-term average of -24. Other survey data for the month indicate that compared to August, a greater share of respondents reported an increase in building activity over the preceding three months, while anticipating higher selling prices during the subsequent three months. Although employment expectations increased in September, this was matched by a more negative assessment of order book levels, leading to unchanged confidence between August and September. Data shows that industrial production fell again in annual terms in July, but in contrast, activity in the tourism sector expanded in both July and August. Growth in tourism remained strong during July as arrivals grew by 9.1% when compared with the same month in 2015. This was entirely driven by an increase in leisure tourism. Tourist expenditure expanded by 4.3%, mainly driven by expenditure on accommodation. In contrast, spending on package holidays fell when compared to a year earlier. Nights stayed grew by 3.5% as increases in private accommodation offset a fall in nights stayed in collective accommodation establishments, such as hotels and guest houses. Occupancy rates also indicate that tourists are spending fewer nights in collective accommodation. In July the total average occupancy rate in such establishments stood at 81.6%, 1.9 percentage points lower than in the comparable month of 2015. The largest declines in occupancy rates were registered in the three and two- star categories. Year-on-year growth in tourist arrivals slowed down to 2.8% in August, with the increase driven by leisure as well as business and professional tourism. Nights stayed went up at an annual rate of 0.7%, entirely on account of a rise in private accommodation, whereas tourist expenditure contracted at an annual rate of 1.9%, as spending on package holidays continued to fall. Industrial production down by 3.5% The index of industrial production, which is a measure of economic activity in the quarrying, manufacturing and energy sectors, fell by 3.5% in year-on-year terms in July 2016. This followed a 6.1% drop in June. On a three-month moving average basis, industrial production fell at annual rate of 4.5% in July. On this basis, output fell substantially among manufacturers of computer, electronic and optical products. Output also fell, though to a lesser degree, among firms that produce food, clothing and wearing apparel. A small decline was also recorded among firms involved in the printing and reproduction of recorded media. These declines off-set increased production of beverages, rubber and plastics, as well as increased output in the energy sector. The index of deflated turnover for retail trade, which is a short- term indicator for final domestic demand, declined on an annual basis in July. This was the first contraction since August 2014. The seasonally and calendar adjusted index fell by 1.7%, on a year earlier, following a rise of 0.8% in June. This development was driven by a faster rate of decline in sales of items other than automotive fuel. Retail trade turnover picked up again in August, however, when it rose by 0.5% on a year earlier. The labour market continued to perform solidly, with the annual growth rate of the gainfully occupied population at 4.3% in April. Price pressures remained moderate with the annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) and the Retail Price Index (RPI) both edged up in August, to 1.0% and 0.8%, respectively, while industrial producer prices increased marginally. Maltese residents' deposits continued to expand rapidly in August, while the annual rate of growth of credit to residents eased. As regards fiscal developments, the deficit on the cash-based Consolidated Fund narrowed in the first eight months of the year, due to an increase in tax revenue. More respondents reported an increase in building activity Stiffening competition hits Valletta restaurants' pockets Tim Diacono Restaurants in Valletta registered a decline in revenue this summer, a decline that has been blamed on growing competition in the capital. Indeed, Valletta restaurateurs who took part in a Deloitte survey said that their revenue went down by 6% when compared to the previous summer. 17 restaurants were surveyed in total across Valletta, out of which nine registered lower revenues, seven registered higher ones, and two said that their revenues were unchanged. Deloitte official Pierre Donvez explained that such a decline boiled down to the fact that more restaurants have opened in the capital, thereby leading to increased competition. In contrast, Gozo restaurants registered a 3.2% increase in revenue when compared to the previous summer, while the revenue of restaurants in the south of Malta increased by 1.3%. Marginal changes were registered amongst restaurants in Sliema (+0.8%), the centre of Malta (+0.8%), the north of Malta (+0.4%), and St. Julian's (-0.7%). The 89 surveyed restaurants also said that their payroll costs have increased by 2.7% over the past year. Donvez explained that restaurants had difficulty finding staff due to the low wages on offer in the hospitality industry, thus forcing them to raise workers' salaries. The survey also cast a light on the spending habits of consumers at Maltese restaurants - 53% of which are locals and 47% tourists. Restaurateurs said that around 30% of their diners spend €30 or more per head, 22% spend between €20 and €30, 25% between €15 and €20, 12% between €10 and €15, while only 10% spent less than €10 per meal.