Albania’s economic sentiment decreased by 2.5 points in February, to about 7.6 points above the historic average, after rising by 4.2 points in January, the central bank said on Monday. The decline reflects decreased confidence in construction, services, and trade, the central bank said in a monthly survey.

The construction confidence indicator dropped by 6.5 percentage points (pp) in February, to 12 percentage points (pp) above the historic average.

The assessments of businesses on the construction activity and current order books were the two factors behind the decline in construction confidence. Expectations for future prices are on an upward trend.

The trade indicator fell by 3.6 pp, to 10 pp above the historic average, whereas the services confidence indicator declined by 1.9 percentage points to 12 pp above average.

The trade indicator fell mainly due to less optimistic assessments of employment in the future. Business performance made a declining contribution to the trade indicator, albeit to a lesser extent. The level of trade indicator, despite being on a downward trajectory, stands above the historical average. Expectations for prices in the future are assessed as upward.

Meanwhile, both components of the service confidence indicator, the current performance of the activity and the level of demand, registered a decline. Businesses’ expectations for future prices are also edging down.

The industry confidence indicator gained 1.5 pp to stand 10 pp above the historic average. The increase was mainly driven by the more optimistic assessments of industry-related businesses on order books, both total and from exports. Industry-related businesses increased their expectations for production and employment for the future compared to the previous month.

The consumer confidence indicator remained almost unchanged, at 1.1 pp above average. Regarding the consumer confidence indicator components, consumers lowered their expectations on their financial situation, while slightly improving their expectations on the overall economic situation in the future. Expectations on the overall future prices and employment have been revised downwards.

The confidence indicator is constructed for each sector and is calculated as the simple average of seasonally – adjusted balances of indicators that have the highest correlation with the reference series (the series of real data of the economy). Whereas the economic sentiment indicator is constructed based on the same balances used for constructing confidence indicators for each sector (industry, construction, services, trade, and consumers), aiming to capture the domestic economic activity. Before aggregating the economic sentiment, these balances are standardized and weighted.