Economic sentiment indicator continues decline in EU, euro area in Jul

While the ESI’s decline was milder than in the previous two months, the employment expectations indicator (EEI) fell more markedly, by 1.8 points in both areas. It was 102.4 in the EU and 103.0 in the euro area.

In the EU, the decline of the ESI was due to significantly lower confidence among managers in industry and construction, only partially offset by markedly higher confidence in retail trade and among consumers.

The ESI improved in Spain (plus 1.3 points) and Poland (plus 0.9 points). By contrast, sentiment deteriorated markedly in France (minus 2.3 points), Germany (minus 2.1 points) and the Netherlands (minus 0.9 points). At 0.1 in Italy, the indicator remained broadly stable.

Industry confidence weakened for the sixth month running in the euro area as managers’ production expectations and their assessments of the current level of overall order books deteriorated markedly and the stocks of finished products were increasingly assessed as too large/above normal.

Retail trade confidence recovered in the euro area partially from the losses of the previous two months, reflecting much more optimistic views on the past and expected business situation.

At the same time, retailers assessed their stocks more often as too large/above normal.

The drop in the employment expectations indicator by 1.8 points in the zone was due to markedly less optimistic employment plans among industry and services managers, while managers’ employment plans in retail trade remained broadly unchanged.

Consumers’ unemployment expectations, which are not included in the headline indicator, worsened slightly in July compared to June.

The European Commission’s economic uncertainty indicator (EUI) edged up in July by 0.8 points to 20.8, as managers’ uncertainty about their future business situation in industry and services as well as uncertainty of consumers regarding their future financial situation increased, while uncertainty in retail trade declined further.

ALCHEMPro News Desk (DS)