Economic Sentiment Indicator continues to improve in EU

In August, the Economic Sentiment Indicator for both the EU and the eurozone continued to improve, registering the fifth consecutive increase in both blocs, according to the European commission's latest survey. The ESI increased markedly - by 5.9 points in the EU, and by 4.6 points in the eurozone - to 80.9 and 80.6 respectively. However, in both areas, the level is still far below the long-term average.

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 eurozone. Services gained considerably in both the EU (+ 8 points) and the eurozone (+ 7). Industry continued to improve from the trough in March, climbing by four points in both areas. Sentiment among consumers and in construction also registered a marginal improvement of one 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, though the rise was also noteworthy in Poland (+4.5), Italy (+3.8) and Spain (+2.9). Malta saw an increase of 4.6 points.

The 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 financial services confidence indicator - not included in the ESI - moved up by seven 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.

The European Commission's Directorate General for Economic and Financial Affairs conducts regular harmonised surveys for different sectors of the economies in the European Union and in the applicant countries.