More NewsEurozone’s Economic Sentiment Indicator Continues to Recover

Eurozone's Economic Sentiment Indicator Continues to Recover

In August, the economic sentiment indicator (ESI) for the EU and euro area continued to improve, registering the fifth consecutive increase in both series since the trough in March. The ESI increased markedly – by 5.9 points in the EU and 4.6 points in the euro area – to 80.9 and 80.6 respectively. However, in both areas, the level is still far below the long-term average.

Recovery of the industrial confidence indicator continued, backed by a strong increase in production expectations and manufacturers’ assessment of order books. Managers’ assessment of the level of stocks also showed an improvement. Still, stocks of finished goods, production expectations and order books remain well below their long-term averages.

The increase in the ESI resulted from a general improvement in sentiment in all sectors in the EU and in all sectors except retail trade in the euro area. Services gained considerably in both the EU (+8 points) and the euro area (+7). Industry continued to improve from the trough in March, climbing by 4 points in both areas. Sentiment among consumers and in construction also registered a marginal improvement of 1 point in both areas. Retail trade picked up in the EU (+2) but decreased slightly in the euro area (-1).

The majority of the Member States registered an improvement. Among the largest Member States, the UK (+9.7 points), the Netherlands (+7.6) and Germany (+5.1) recorded the most significant increases in sentiment, although the rise was also noteworthy in Poland (+4.5), Italy (+3.8) and Spain (+2.9).

The financial services confidence indicator – not included in the ESI – moved up by 7 points in both areas. While managers’ expectations of demand for the next three months and assessment of that over the past three months improved markedly, their assessment of the business situation fell back substantially after the improvement registered last month.

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