EU Economic Sentiment Indicator regains momentum

The Economic Sentiment Indicator improved significantly in March, reaching 99.6 (+2.0 points) in the EU and 97.7 (+1.8) in the eurozone. After the pause recorded in February, the upward trend appears to have regained its momentum. The ESI is now close to its long-term average, although it will still require further improvement for the economic activity to reach its pre-crisis level.

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

The majority of the EU member states reported a general improvement in sentiment. Among the largest member states, Germany (+3.4 points) reported the most significant increase, followed by Poland (+2.7), the UK (+2.6) and the Netherlands (+2.4). The improvements were less marked in France (+1.4) and Spain (+1.4). Sentiment in Italy deteriorated moderately (-1.5).

This overall improvement masks divergences across countries, with sentiment being broadly at its long-term average in some member states (Poland, Germany, France, Italy) while others are lagging behind (Holland, Portugal, Spain and Greece).

In Malta economic sentiment increased by one point from 97.9 to 98.9.

Sentiment in industry increased by two points in the EU and by three points in the eurozone. This sharp rebound in confidence, picking up again after having levelled off in February, was the main driver of the overall improvement, with Germany contributing the most. Managers in industry were upbeat about their order books and production expectations, whereas the level of stocks was assessed with some caution.

Confidence in services improved by one point in the EU and remained unchanged in the eurozone. The retail sector improved by one point in the EU and by three points in the eurozone. Confidence among consumers remained broadly unchanged in both the EU and the eurozone. Across countries views diverged on the general economic outlook and unemployment expectations, resulting in a generally cautious outlook for both the EU and the eurozone aggregates.

Confidence in financial services, which is not included in the ESI, improved by one point in the EU and declined by two points in the eurozone.

The Directorate General for Economic and Financial Affairs conducts regular harmonised surveys on different sectors of the economies in the European Union and in the applicant countries. They are addressed to representatives of the industry (manufacturing), the services, retail trade and construction sectors, and to consumers.