Business confidence rises by 1.1% in the third quarter of 2023 in the Canary Islands

The National Statistics Institute (INE) has announced that the business confidence in the Canary Islands has increased by 1.1%.

The National Statistics Institute (INE) has reported a significant increase in the Harmonised Business Confidence Indicator (HBCI) for the third quarter of this year, marking three consecutive quarters of growth. This hasn’t been observed since the fourth quarter of 2021. The Canary Islands also experienced a positive rise in business confidence, increasing by 1.1%.

The boost in business confidence during the July-September period can be attributed solely to improvements in the expectations indicator. Specifically, the balance of expectations, which represents the difference between optimistic and pessimistic views among business professionals, reached +5.2 points. This is the highest level recorded since the second quarter of 2019.

The increase is primarily driven by the percentage of businesses that anticipate favorable progress between July and September, standing at 22.2%. This represents the highest percentage since the third quarter of 2018. Conversely, the proportion of businesses expecting unfavorable developments has decreased from 17.2% in the previous quarter to 17%, while those expecting a “normal” evolution dropped from 62.2% to 60.8%.

Furthermore, the perception of the current business situation has improved. The situation balance, which compares favorable and unfavorable responses to the previous quarter, has risen from -1.5 points in the second quarter to 6.9 points in the third quarter. This positive outlook is a result of an increased number of businesses reporting favorable developments over the past three months and a rise in those reporting positive behavior.

In terms of completed quarters, the ICEA (Harmonised Business Confidence Indicator) reveals that 22.6% of businesses have a favorable opinion of their performance in the second quarter of 2023, compared to 15.7% reporting unfavorable developments and 61.7% describing normality. In the previous quarter, these percentages were 19%, 15.7%, and 61.7%, respectively. The ICEA is a quarterly survey conducted at a European level, based on a representative sample of business establishments.

Business confidence has risen across all economic sectors, company sizes, and autonomous communities during the third quarter of this year. Notably, the transport, hotels, and catering sector experienced the highest increase in confidence (+5.1%), followed by construction (+3%), commerce (+2.2%), industry (+2.1%), and other services (+1.9%).

Confidence has increased in establishments of all sizes, with the most significant gains seen in firms with 200-999 employees (+4.4%) and firms with 10-49 employees (+2.7%). Establishments with fewer than 10 employees observed a 2.3% rise, while those with 50-199 employees and 1,000 or more employees saw increases of 2.2% and 0.7%, respectively.

Regionally, business confidence has risen in all areas, with Extremadura (+5.2%), Castilla y León (+5%), Cantabria (+4.9%), and La Rioja (+4.7%) experiencing the highest increases. The most modest increases were observed in Murcia (+1.5%), the Canary Islands and Catalonia (+1.1%), Madrid (+0.6%), and Castile-La Mancha (+0.2%).

The Harmonised Business Confidence Indicator is compiled using various sources, including the OECD, the German Ifo, and primarily the Japanese Tankan, which is compiled by the Japanese central bank.

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