Economic sentiment continues to rise in EU

The Economic Sentiment Indicator rose once again in December to 92 (+4.1 points) in the European Union and to 91.3 (+2.5) in the eurozone. The ESI has improved in both areas for nine consecutive months although it still remains below its long-term average.

The European Commission's Directorate General for Economic and Financial Affairs (DG ECFIN) conducts regular harmonised surveys for different sectors of the economies in the EU.

The majority of member states reported a general improvement in sentiment. Among the largest member states, the UK reported a sharp increase (+8.2 points), followed by France (+4.1), while the improvements were less marked in Italy (+2.9), Germany (+1.7) and Spain (+1.2). Sentiment in the Netherlands remained unchanged and decreased slightly in Poland (-0.6). In Malta the ESI increased to 93.1 (+4.2).

Sentiment in industry, which increased by three points in both the EU and the eurozone remained the main contributor to the overall improvement. While most respondents in this sector reported strong improvements in their order books, they appear to have scaled back their production expectations. The declining level of stocks, especially in the automotive sector, confirmed further destocking.

Services increased by one point in the eurozone and by six points in the EU, the latter owing to a strong increase in UK services sentiment. Confidence among consumers improved by one point in both areas, as unemployment fears faded. Mirroring this outlook, employment expectations picked up in industry and services. No major development was noted in retail, which remained unchanged in the EU and increased by one point in the eurozone. Construction declined by one point in the EU and by two points in the euzozone.

Confidence in financial services - which is not included in the ESI - remained broadly unchanged in the EU and declined by two points in the eurozone, where managers' assessment of the business situation over the past three months was significantly more negative than in last month's survey.

The European Commission's surveys are addressed to representatives of industry (manufacturing), services, retail trade and construction sectors, as well as to consumers.