By Jacob Borg
Central Bank says figures should be interpreted with caution due to low response rate
Sentiment in the construction sector slumped in October due to a reduction in work orders, according to the Central Bank’s monthly economic update.
The sentiment indicator in the sector turned negative but remained above its long-term average of -7.2%.
It stood at -3.6% in October, down from 6.6% the previous month.
Compared to September, significantly more respondents assessed their overall order books to be below normal, while employment expectations improved, the Central Bank said.
It cautioned that sentiment for this sector needs to be interpreted with caution, due to a low response rate among businesses.
More orders for the sector could be in the pipeline however, as 1,521 new residential building permits were issued in September, 1,047 more than the number issued in September 2024.
Commercial property development permits continued to tick over too, with 345 development permits being issued, 134 more compared with the same month of 2024.
Higher than usual uncertainty
The reported sentiment slump in the construction sector comes amid higher than usual uncertainty during the month of October, according to the Central Bank’s economic policy uncertainty index.
This increase was driven largely by domestic factors, with minimal influence from international developments.
The uncertainty index monitors economic policy uncertainty by synthesising information gleaned from Maltese news portals.
As is typical during October, the Central Bank said media coverage was dominated by the government’s 2026 Budget, particularly the widening of income tax bands for married couples and parents.
Ongoing debates on planning reform, environmental policy, and issues relating to the labour market, cost of living, quality of life, and artificial intelligence also contributed to the index, alongside frequent references of a political nature, the Central Bank said.
Retail sector confidence
Confidence in the retail sector fell to 6.4%, down from 15.8% in September.
This decline was in part impacted by retailers’ assessment of sales over the past three months.
On the flipside, consumer confidence increased in October and moved further above its long-run average of -9.7%. It averaged 4.3%, up from 2.3% a month earlier.
The sentiment indicator in industry reached 6.6%, from up from 3.5% in September and above its long-term average of -4.3%.
Firms’ production expectations for the months ahead stood more positive. At the same time, a smaller share of companies assessed their stocks of finished products to be above normal levels.
The Central Bank said a larger share of firms assessed their order book levels to be below normal levels.
In the manufacturing sector, production fell by 2.3%, in contrast to an increase of 6.7% in August.
