In July 2025, economic sentiment in the euro area showed signs of renewed optimism, with the Economic Sentiment Indicator (ESI) rising by 1.6 points to 95.8. This modest recovery, still below the long-term average, was fuelled by stronger confidence across industry, services, retail, and a slight uptick in consumer sentiment. Notably, major economies like France (+2.4), Spain (+2.2), Germany (+1.2) and, to a lesser extent, Italy (+0.4) drove this upward shift, suggesting that regional resilience may be gaining ground.

Industry sentiment was buoyed by improved production expectations and export outlooks, while service providers reported increased demand expectations. Retailers, despite reporting a weaker recent business environment, were notably upbeat about future prospects. Consumers, expressed more confidence in their household finances and purchasing plans, although they remained cautious about broader economic conditions.

However, construction sentiment slipped due to weaker employment expectations and rising concerns about demand and material shortages. Labour market expectations across the EU remained flat, with gains in services offsetting losses in retail and construction. Meanwhile, price expectations rose in nearly all sectors, especially services, indicating persistent inflationary pressures.

Despite improving sentiment, economic uncertainty edged up slightly, particularly in industry and services, highlighting that cautious optimism is shadowed by structural fragilities and future unpredictability. These latest updates take the RPI to 44 and the RPI-P to 51. This means that economic activities are now well ahead of the expectations of the euro area economy.

Economic sentiment expected at 94.1 for July versus 94.0 in the previous report. Industry sentiment seen at minus 11.1 versus minus 12.0 Consumer sentiment seen at minus 14.7 versus minus 15.3.

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.