Economic Sentiment Declines In Euro Area, But Stable In EU


In October the Economic Sentiment Indicator (ESI) remained unchanged in the EU, at 86.2, and declined by 0.7 points in the euro area, to 84.5.

In the EU, marked declines in the industry and construction sectors were offset by improvements in services and retail trade.

Consumer confidence remained broadly unchanged. In the euro area marked decreases in industry and construction outweighed the improvement in the retail trade sector, while confidence in services and among consumers remained broadly stable.


Overall, the decrease in the ESI has lost pace since September in both areas and has even come to a halt in the EU in October.

Although the majority of the Member States witnessed a drop in economic sentiment, this was only the case for three out of the seven largest Member States: the ESI registered falls in Poland (-2.8), France ( 1.8) and Germany (-1.4).

However, the ESI continued last month’s recovery in the UK (+5.2) and Spain (+1.8) and rose slightly in the Netherlands (+0.8) and Italy (+0.5).

Confidence in industry continued the downward trend reported since March. The confidence indicator decreased by 1.2 points in the EU and 2.1 points in the euro area.

In both regions, the decline is mostly due to a much more negative assessment of the current level of overall order books. In the euro area also the other two components (production expectations and stocks of finished products) worsened, while in the EU, managers’ production expectations remained broadly stable and their assessment of stocks of finished products improved.

In both areas managers’ assessment of their companies’ past production and current level of export order books deteriorated markedly, too. Confidence in services improved in the EU (+0.7) and remained broadly unchanged in the euro area. In both areas, managers’ demand expectations improved while their assessment of past business situation remained broadly unchanged.

Views on past demand improved in the EU as well, but deteriorated in the euro area. Confidence in retail trade picked up in both the EU (+2.4) and the euro area (+1.1). In both areas, the present business situation and the development of the current volume of stocks were viewed more positively, while the assessment of the expected business situation improved in the EU but declined in the euro area.

Confidence in the construction sector decreased in both the EU (-2.6) and the euro area (-1.2). In the EU, the decrease was attributable to a more negative assessment of both order books and employment expectations. In the euro area views on the first component remained broadly stable.

In both regions, employment plans were further revised downwards by retail trade and construction managers. In the industry and services sectors employment plans were revised upwards in the EU, but downwards in the euro area. Selling price expectations decreased or remained stable in all sectors but industry, where managers expect price increases.

Consumer confidence remained broadly stable in both the EU (-0.3) and the euro area (+0.2). While consumers in both areas viewed the future general economic situation less pessimistically, their unemployment expectations worsened. In the EU, consumers’ expectations about their households’ financial situation and their savings over the next 12 months remained broadly unchanged, while both improved in the euro area.

Leave a Reply

Your email address will not be published. Required fields are marked *