The pace of economic growth suffered a slowdown in the first trimester of this year, but even so showed greater vigor than during the first three months of 2005. According to the business outlook surveys published this month by the INE, this was the first drop in the economic growth rate since the first trimester of 2004.

In terms of business owner confidence, the sector showing the most significant drop in confidence levels was the manufacturing industry, with the rate falling for the second consecutive trimester after reaching a high in the third semester of last year.

The sector’s operators point toward financial difficulties and the lack of raw materials as the main obstacles faced during the first three months of 2006. Manufacturing industry activities were also affected, according to the INE, by the “excess in bureaucracy and state regulations, the high rate of worker absenteeism and insufficient equipment.”

The transportation and transportation support service sector also registered a drop in operator confidence, reversing the upward trend that had begun in the fourth trimester of 2004. According to the INE, the business owners surveyed pointed toward “financial difficulties, unfair competition and lack of demand” as the main factors negatively affecting their activities during the first three months of this year.

Although it registered a slight drop in comparison to the previous trimester, the level of confidence displayed by retail establishment operators remains above that seen in the first trimester of 2005. A break in stocks, excessively high sale prices, financial difficulties and insufficient demand were the main obstacles encountered during the first three months of the year.

Trade fair commerce, on the other hand, showed an opposite trend. Confidence levels, although still low, reversed the downward trend that had been patent over the past several trimesters. According to INE data, this positive change came as the result mainly of an improvement in sales and orders.

Civil construction and public work operator confidence maintained the upward trend of the past seven trimesters, although confidence levels are still considered negative. In the opinion of those surveyed, activities were negatively affected by insufficient demand, the deterioration of sales perspectives and the lack of materials.

Finally, the tourism sector in the first trimester of 2006 saw an increase in confidence levels, not only in relation to the previous trimester, but also with regards to levels registered in the first three months of last year. Tourist sector operators indicate that “difficulties finding appropriately qualified personnel and lack of demand” were the main obstacles they encountered in the first three months of 2006.