Brussels, 28 March 2014
March 2014: Economic Sentiment up in the euro area and broadly flat in the EU
In March the Economic Sentiment Indicator (ESI) increased by 1.2 points in the euro area (to 102.4), while remaining broadly flat in the EU (a marginal increase by 0.3 points to 105.3).
Economic sentiment indicator (s.a.)
March EU: 105.3 - Euro Area: 102.4
Euro area developments
In the euro area, the improved sentiment was driven by markedly more confident consumers. The increases in services and retail trade confidence were comparatively modest and industry and construction sentiment remained broadly unchanged compared to February. All of the five largest euro area economies saw the ESI rising, in general fuelled by buoyant consumer confidence. The Netherlands booked the sharpest ESI increase (+2.3), followed by Spain (+2.2) and Italy (+1.3), while France (+0.7) and Germany (+0.4) saw only modest improvements.
Industry confidence remained broadly unchanged (+0.2) as a result of managers' brighter production expectations being cancelled out by moderately deteriorating appraisals of the level of overall order books and the stocks of finished products. Of the questions not included in the confidence indicator, the level of past production was viewed somewhat more positively, while the current level of export order books was seen more negatively. The increase in services confidence (+0.9) was triggered by more positive assessments of the past business situation and past demand, which contrasted with grimmer views on expected demand. Consumer confidence was particularly buoyant, registering the sharpest monthly increase since April 2009 (+3.4). Consumers' views on the future general economic situation and the level of future unemployment, as well as their savings expectations improved sharply. The improvement in households' expected financial situation was comparatively moderate. The slight improvement in retail trade confidence (+0.4) was the result of managers' more positive evaluation of the volume of stocks in combination with broadly unchanged assessments of the present and expected business situation. The flat development in construction confidence (-0.3) reflects opposing tendencies in its two components: while employment expectations were revised upwards, managers showed increased concern about the level of order books. Financial services confidence (not included in the ESI) showed the sharpest decline in two and a half years (-5.7). Managers were much grimmer on the past business situation, past demand and, to a lesser extent, demand expectations.
While employment plans were revised upwards in retail trade and construction, they remained virtually unchanged in industry and services. Selling price expectations, by contrast, declined across the board. Compared to industry and construction, the drops in the services and retail trade sector were particularly pronounced. Also consumers' price expectations reached the lowest level in almost three and a half years.
Contrasting with the euro area, the headline indicator for the wider EU remained broadly flat (+0.3), due to slipping sentiment in the largest non-euro area EU economy (UK, -4.1) and broadly unchanged levels in the second largest one (Poland, +0.2). On a sector basis, confidence in retail trade declined and was virtually flat in services, rather than showing the moderate increases booked in the euro area. Both deviations were caused by significant drops in UK sentiment. Industry, construction and consumer confidence behaved in line with the euro area, showing flat and, in the case of consumers, buoyant developments.
EU-wide employment plans were in line with those for the euro area, except for downward revisions in the EU services sector and a more tentative upward revision in retail trade. Also the negative euro area selling and consumer price expectations were paralleled on EU-level.
Industrial confidence indicator (s.a.)
March EU: -2.7 - Euro Area: -3.3
Service confidence indicator (s.a.)
March EU: 8.2 - Euro Area: 4.2
Consumer confidence indicator (s.a.)
March EU: -6.6 - Euro Area: -9.3
Retail trade confidence indicator (s.a.)
March EU: 0.5 - Euro Area: -2.6
Construction confidence indicator (s.a.)
March EU: -24.5 - Euro Area: -28.8
Financial services confidence indicator (n.s.a.)
March EU: 10.9 - Euro Area: 2.8
The next Business and Consumer Survey is due to be published on 29 April 2014.
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