Economic sentiment continues to rise in EU and eurozone

In November, the Economic Sentiment Indicator in November rose to 87.9 (+1.9 points) in the EU and to 88.8 (+2.7) in the eurozone. The indicator has improved in both areas for eight consecutive months since its nosedive in March, though it still remains significantly below the long-term average.

The majority of member states reported a general improvement in sentiment. The indicator rose most sharply in The Netherlands (+6.3), while the improvements were most modest in Poland (+2.9), Italy (+2.5), France (+2.2), Germany (+7.1), and Spain (+1.4). The UK, in contrast, witnessed a sizable drop (-2.9). Malta's ESI, however, dropped to 88.9 (-1.6), although this figure remains the second highest rate throughout the year.

Sentiment in industry, which increased by one point in the EU and by two points in the eurozone, was the main contributor to the overall improvement. The positive results in Germany and France were enough to offset declines in the UK and Spain. While most managers reported small improvements in their order books - except in the UK and Spain - it was production expectations which had the largest positive effect overall. Assessment of the level of stocks was broadly stable in the large countries, but it signalled more concerns about the level being above the desirable in the UK.

Confidence among consumers remained unchanged in the EU and improved by just one point in the eurozone. This was influenced by a drop in German consumer confidence related to more widespread unemployment fears. Services increased by two points in the EU and by three points in the eurozone. Positive signals emerged also in retail, which increased by six points in the EU and four points in the eurozone.

Construction improved by two points in the EU and by three points in the eurozone. Confidence in financial services - not included in the ESI - declined in both regions. This was mainly due to disappointing demand over the past three months and bleaker demand expectations for the next three months.

According to the six-monthly industrial investment survey, which was carried out in October and November, managers in most member states expect to reduce their investment volumes by five per cent in the EU and six per cent in the eurozone in 2010 as compared to investment in 2009.