Economic sentiment in the EU approaching long-term average

In January the Economic Sentiment Indicator rose for the 10th successive month and stood at 97.1 (+2.1 points) in the European Union and 95.7 (+1.6) in the eurozone.

Although the rebound appears to be slowing, the indicator is now back at a level approaching its long-term average in both areas.

The ESI is conducted by the European Commission's Directorate General for Economic and Financial Affairs.

The majority of EU member states reported a general improvement in sentiment. Among the largest member states Italy (+4.2 points) reported the most significant increase, followed by the UK (+3.2) and The Netherlands (+2.7). The improvements were less marked in Poland (+0.9), Germany (+0.6), France (+0.6) and Spain (+0.3).

In Malta the ESI decreased by 3.3 from 98.7 to 95.4.

Sentiment in industry, which increased by three points in the EU and by two points in the eurozone, remained the main contributor to the overall improvement.

Most respondents in this sector reported a strong improvement in both their order books and the production expectations. The declining level of stocks across all the main industrial sectors confirmed further destocking. The results of the quarterly manufacturing survey confirmed these positive developments.

The survey participants were optimistic about past and future orders. Firms also reported an increase in their capacity utilisation rates which now stands at 73.1 per cent in the EU and 72.4 per cent in the eurozone, although these are still far below their respective averages.

Confidence among consumers improved slightly in the EU (+1 point) and remained unchanged in the eurozone. The general economic outlook and decreasing unemployment fears contributed to the overall improvement. Confidence in services increased by two points in the eurozone while it remained unchanged in the EU mainly due to falling confidence in the UK.

In the retail sector confidence increased by three points in the EU and by five points in the eurozone.

However, these results were mainly driven by a very strong increase in Italy. In contrast, construction continued to decline, dropping by one point in both the EU and the eurozone.

Confidence in financial services, which is not included in the ESI, is now stabilising at around the pre-crisis level. It remains broadly unchanged in the EU and improved by six points in the eurozone.

The European Commission's DG ECFIN conducts regular harmonised surveys for different sectors of the economies in the EU.