The economic sentiment indicator (ESI) rose to 96.3 (+1.0 points) in February, signalling improved confidence in the industry and consumer sectors, though still below the long-term average. Across key Euro Area economies, sentiment rose in France (98.6 after 96.3) and Germany (89.3 after 88.1) but fell in Italy (99.8 after 100.2) and Spain (102.3 after 104.3).

Industry confidence strengthened for a second consecutive month (+1.4), driven by better production expectations and order book assessments. However, services and retail trade confidence remained stable, suggesting that demand expectations are yet to translate into strong growth. Consumer confidence increased (+0.4), supported by less pessimism about the general economy and an increased willingness to make significant purchases.

Conversely, the employment expectations Indicator fell (minus 1.5), reflecting weaker hiring intentions, especially in services and construction, despite an uptick in retail employment plans. Labour shortages in construction increased (+1.0 points to 27.8 percent), highlighting workforce constraints.

Price expectations declined in services and construction but edged up in industry. While economic uncertainty remained stable (18.2), diverging business confidence and employment trends suggest a delicate balancing act between recovery and ongoing structural challenges in the European economy. The latest update takes the RPI and RPI-P to 6 and 8, respectively. This means that economic activities are within the consensus expectations of the euro area economy.

Industry sentiment seen at minus 12.2 in February versus minus 12.9 in January.

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.