In December 2024, the euro area faced a downturn in economic sentiment and employment expectations, reflecting growing uncertainty. The economic sentiment indicator (ESI) dropped to 93.7 (minus 1.9 points), and the employment expectations indicator (EEI) declined to 97.3 (minus 1.4 points), both falling below their long-term averages. Declines in industry, construction, and consumer confidence drove the ESI's fall, though service sector optimism partially offset these drops. Retail trade confidence remained stable, reflecting mixed business expectations.

Across key EU economies, sentiment fell sharply in France (93.5 after 96.5), Germany (86.1 after 88.6), and Italy (98.2 after 99.3), while Spain (102.9 after 102), showed a slight improvement. Industry confidence plummeted (minus 2.2), with managers reporting declining production expectations and weaker order book assessments. Meanwhile, consumer confidence dipped for the second consecutive month (minus 1.0), driven by concerns over national economic conditions and major purchase intentions, though household financial expectations remained steady.

Construction confidence weakened, reflecting cautious employment outlooks, while retail trade confidence showed minor gains in future business expectations. Notably, selling price expectations rose across all sectors, most significantly in services, aligning with surging consumer price expectations.

Economic uncertainty climbed (1.1 to 17.2), driven by apprehension about future business conditions in industry and retail. This suggests ongoing challenges as the euro area navigates economic pressures and inflationary trends, taking the RPI to minus 5 and the RPI-P to minus 18. This means that economic activities, in general, are slightly behind market expectations.

Economic sentiment is seen down at 95.7 in December from 95.8 in November. Consumer sentiment is expected to worsen to minus 14.5 from minus 13.7.

Released by the European Commission, the economic sentiment index (ESI) provides a broad measure of both business and consumer sentiment. Results are available for all participating countries and aggregated to the Eurozone and European Union level. The survey is very detailed and offers information on demand, output and inflation.

The survey offers key sentiment data across the European Union and the Eurozone region. Data are available for each country and are aggregated for both the Eurozone and EU. It is conducted by the European Commission rather than Eurostat, the compiler of most other EMU data. The index is a broad measure of both business and consumer sentiment in the EU members. Because of its coverage of all the EU countries it is highly regarded in the financial markets as a good indicator of the mood of consumers and industry in each country. It is also normally a good indicator of quarterly GDP.

Confidence indicators are calculated for industry, services, construction, retail trade and consumers. In turn, they are combined into an overall composite number, the economic sentiment indicator (ESI). The data are seasonally adjusted and defined as the difference (in percentage points of total answers) between positive and negative answers. The survey also covers other areas of the economy that are not explicitly included in the ESI. In particular, responses to questions about the inflation outlook are used by the ECB as one means of measuring inflationary expectations.