Net share of firms reporting better business conditions increases by 44% in third quarter of 2023

The net share of firms reporting better business conditions increased by 44 per cent in the third quarter of 2023, a business dialogue between the Central Bank of Malta (CBM) and non-financial corporations revealed on Friday.

The increase signifies an improvement from the results of the second quarter, which came in at 34 per cent.

Looking ahead, a net 47 per cent of firms expected an improvement in short-term business activity, marginally higher than 46 per cent in the preceding quarter.

The CBM confirmed that in view of the improved supply chain conditions, cost pressures have “eased considerably”, yet they remain “elevated” from a historical perspective. A net 46 per cent of contacts reported that input prices have increased in recent months, lower than 62 per cent in the previous period.

When asked by the CBM to comment on unit cost expectations over the next 12 months, most firms expected these to “remain stable or increase further”. However, the high level of global uncertainty prevented several others from passing a firm judgement.

The net share of firms reporting higher selling prices stood at 48 per cent in the third quarter of the year, a decrease from the 53 per cent recorded in the previous quarter.

In the quarter under review, the net share of firms planning to invest was 50 per cent, a drop from the second quarter’s 62 per cent.

The net share of firms planning to increase their staff complement decreased by 16 per cent to a net 45 per cent.

The CBM said that companies have “continued to express concerns” about labour and skill shortages, together with pressures to increase wages. Additional questions introduced during this round of dialogue showed that a large share of contacted firms expect wages this year and the next to “rise by more than five per cent”.

The full publication is available here, while the business dialogue survey can be accessed in a new and interactive way through its dedicated dashboard by clicking here.