Sentiment among Maltese manufacturing firms deteriorated slightly during the first quarter of 2010 after having improved during the previous three quarters, the Central Bank said today.

It said that the seasonally-adjusted confidence indicator declined by 3 percentage points from its December level, to -5 in March.

"Nevertheless, at this level the indicator was still well above its average level for 2009 of -18," the Central Bank said.

"The slight deterioration in confidence reflected lower order book levels and a marginal accumulation of stocks. The former was further corroborated by the fact that respondents identified weak demand as the main factor limiting production. Nevertheless, production expectations for the next three months remained positive and were broadly unchanged from their December level," the bank said.

Survey data also showed that employment expectations had improved, the bank said, even though on balance respondents still expected employment levels to fall.

"This mirrors the fact that employment in manufacturing fell at a declining pace during the final quarter of 2009," the bank said.

It noted a divergence in sentiment between manufacturers of consumer goods and those of investment goods. Confidence among the former deteriorated further, falling by 16 percentage points from its December level to -24 in March.

Contributory factors included lower order book levels, particularly in the food and beverages and publishing and printing categories, along with a greater degree of pessimism regarding production expectations and a build-up.

CONSUMER CONFIDENCE

The bank said that consumer sentiment deteriorated during the first quarter of 2010, with the seasonally adjusted indicator falling by 3 percentage points to -35 in March. In fact, consumer sentiment had fluctuated in a relatively narrow range since the end of 2008.

When compared to December, respondents were more pessimistic about their financial situation, the general economic outlook and their ability to save. Still their expectations about the labour market were unchanged from December, probably reflecting the recent stabilisation of the unemployment rate.

Nevertheless, respondents' spending intentions with regard to major purchases, such as of new cars and homes, were on average lower than in the previous quarter.

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