June 2013: Economic Sentiment Improves Markedly In Both The Euro Area And The EU

In June the Economic Sentiment Indicator (ESI) improved markedly, continuing last month's increase. Sentiment increased by 1.8 points in both the euro area (to 91.3) and the EU (to 92.6).

Economic sentiment indicator (s.a.)

June EU: 92.6 - Euro Area: 91.3

Euro area developments

In the euro area, the increase was driven by brightening sentiment among consumers and managers in all business sectors except for services, where assessments remained broadly unchanged. All the five largest euro area economies saw sentiment improving, namely Spain (+2.5), Italy (+1.7)¹, France (+1.3), Germany (+1.1) and the Netherlands (+0.9).

The increase in industry confidence (+1.8) resulted from a much more positive assessment of the current level of overall order books and production expectations, while managers' assessment of the stocks of finished products remained broadly unchanged. The positive overall developments were also reflected in an improving assessment of the current level of export order books, while the assessment of the past production worsened (the latter two questions are not included in the confidence indicator). Services confidence remained broadly stable (-0.3). Managers' negative assessment of the past business situation was mitigated by marginally more positive assessments of past demand and demand expectations. Consumer confidence increased markedly (+3.1) and for the seventh consecutive month. Consumers were significantly less pessimistic concerning the future general economic situation. Also their unemployment and savings expectations and their assessment of the future financial situation of their households became less gloomy.² Retail trade confidence rose markedly (+2.3), mainly driven by brightening appraisals of the present business situation, but also by less pessimistic business expectations and improving assessments of the volume of stocks. Construction confidence improved as well (+1.4), resulting from a less negative assessment of both order books and employment expectations. Also financial services confidence (not included in the ESI) picked up (+0.7), driven by better assessments of the past business situation and past demand, which offset worsened demand expectations.

Employment plans were revised upwards in construction and downwards in retail trade, while remaining broadly unchanged in industry and services. Selling price expectations increased in industry and construction, while remaining stable in services and retail trade. Consumer price expectations increased slightly.

EU developments

In the wider EU, developments differed only slightly from the euro area. Confidence in the two largest non-euro area EU economies decreased slightly, by 0.7 points in the UK and 0.6 points in Poland. On a sector-basis the main difference with the euro area was a marked improvement in services confidence (+1.7), resulting chiefly from a significant rise in UK services confidence. On the other hand, industry confidence improved somewhat less (+1.0). As in the euro area, EU financial services confidence increased by 0.7 points. In slight contrast to the euro area, employment plans improved in retail trade and services, and EU selling price expectations rose in all business sectors except for services. Consumers in the EU expect prices to remain broadly stable.

Industrial confidence indicator (s.a.)

June EU: -11.3 - Euro Area: -11.2

Service confidence indicator (s.a.)

June EU: -6.2 - Euro Area: -9.5

Consumer confidence indicator (s.a.)

June EU: -17.5 - Euro Area: -18.8

Retail trade confidence indicator (s.a.)

June EU: -10.2 - Euro Area: -14.4

Construction confidence indicator (s.a.)

June EU: -31.0 - Euro Area: -32.2

Financial services confidence indicator (n.s.a.)

June EU: 7.5 - Euro Area: -1.4

The next Business and Consumer Survey is due to be published on 30 July 2013.

Full tables are available on:

http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm

Scheduled publication dates

Contacts : Simon O'Connor (+32 2 296 73 59) Audrey Augier (+32 2 297 16 07) Vandna Kalia (+32 2 299 58 24)