PwC/AGEFI Monthly Barometer - May 2021

In collaboration with AGEFI Luxembourg

Economic Confidence Indicator

May 2021

It appears that the light at the end of the tunnel is approaching. The PwC Business Barometer has recorded a significant increase for the second consecutive month, rising an additional 23 points in April to reach +33. This is indicative of an increasingly favourable outlook for the coming weeks, amid a wave of optimism regarding the status and prospects of the economy.

This optimism is strongly reflected in Luxembourg labour’s market, with employment figures showing a +0.5% increase in the first quarter of 2021. While this growth trajectory is marginal with respect to that of pre-crisis times, STATEC reports that a number of sectors currently boast higher headcounts than they did at the beginning of the pandemic. The losers in this crisis in terms of employment were hospitality (-8.3% over one year), manufacturing (-2.0%), retail (-0.4%), transport (-0.3%) and personal services (-0.3%). Employment prospects for contractors have shown a particularly notable increase, especially among those involved in construction and other non-financial services. Temporary unemployment (prominent mostly in the construction and manufacturing sectors) has also almost returned to pre-crisis levels.

Overall morale in Luxembourg continues along an accelerating trajectory, with most of the observed sentiment indicators recording sharp increases throughout the month of April. Both consumer and industrial confidence increased by approximately 7-8 points, while confidence in the construction sector remaining largely unchanged since February 2020.  

Furthermore, positive signs of economic expansion and optimism have been recorded across the euro area. Manufacturing activity in the region expanded at a record pace throughout the month of April, rising sharply for the second consecutive month despite supply chain delays. Manufacturing firms also benefited  from a significant amount of new business, resulting in a third consecutive month of net hiring in the sector. This surge in hiring activity (the highest rate since late 2018) can largely be attributed to the improved business outlook, as well as the need to meet increasing demand and order backlogs.

This month also signals the return to growth for the euro area services sector, the first increase observed since August 2020. This increase comes as a result of the easing of restrictions across the region and an improved outlook for the coming months.

Over the pond, President Joe Biden has garnered heavy attention upon the unveiling of his USD 2tn infrastructure plan. This generated a significant media buzz, garnering both praise and criticism as a result of the plan’s a) unprecedented magnitude; and b) pledge that the US will be carbon-neutral by 2050. Should this plan materialise, it could represent a paradigm shift in the sustainable development sphere;  potentially leading to a sharp increase in the rate of adoption of sustainably-conscious infrastructure development a new wave of environmentally-friendly policies.

  • The monthly PwC barometer, in collaboration with AGEFI Luxembourg, is an economic confidence indicator which is intended to be a simple and pragmatic tool aimed at capturing the economic atmosphere of the Grand Duchy each month.
  • The indicator is based on a number of sentiment indices published monthly by Eurostat and Sentix, which are based on surveys (businesses, consumers or investors/analysts).
  • The indicators used are: consumer confidence (EA for euro area and LUX for Luxembourg), industrial confidence (EA and LUX), construction confidence (EA and LUX), financial confidence (EA), retail confidence (EA), services confidence (EA) and the Sentix Index (EA).

Contact us

Dariush Yazdani

Dariush Yazdani

Market Research Centre Partner, PwC Luxembourg

Tel: +352 49 48 48 2191

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