Every month, our statistical department inquires firms in various sectors about their business prospects. Broadly, it asks them if they expect their revenues to improve in the following month and if they have improved in the previous month. The answers are then quite simple: revenues improved, stayed about the same, or worsened.
The survey does not provide a rigorous measurement of how businesses are coping with the current times. Still, it gives us, at least, an indication about the various sector’s moods and where owners or managers see their businesses going. Two activities, in particular, can be seen as bellwethers of the overall economic health – restaurants and retail trade. The published surveys data covers the first five months of the year and does some sobering reading.
Remember that February to June, last year, was when the economy almost came to a standstill. Visitors vanished, jobs were lost, and wage income shrank, uncertainty prevailed. Recovery did not start to manifest itself until the last third of the year, and there were hopes the first half of this year would mark a significant turnaround. The number of visitors is certainly still far from the pre-pandemic levels but are much above those seen for most of the first half of last year.
Yet, when asked about their perceptions on year-on-year changes in receipts, a sizeable share of respondents, more than 42 percent, to the May survey still declare they decreased or, at best, stabilized. More than that, if we compare to the values obtained in the April survey, the mood deteriorated noticeably. Then – and again, mostly against expectations, given the magnitude of last year’s crash – the respondents that did not see improvements were just over 26 percent of the total.
The results are not as bleak in the retail sector, but the level of expectations varies greatly depending on the specific sub-sector we observe. For example, in shops mainly catering for tourists, all expectations are indeed increasing revenues this year. Somehow, that would be the candid expectation for all retail businesses, bearing in mind how merciless the first half of last year was. However, some still denote very negative expectations, especially those shops more reliant on local customers. For instance, in supermarkets, the consumption benefits notwithstanding, a whopping two-thirds of respondents expect revenues to decrease compared to last year. Only 22 percent expect an improvement.
These figures suggest that local consumers also feel less than reassured about the future and hold out their consumption outlays accordingly.