Economic sentiment in Europe edged upward in September 2025, but the recovery remains fragile. The modest rise in the economic sentiment indicator at 95.5 from a revised 95.3 reflects improved optimism in industry, services, and households, though retail and construction remain weak. The headline figure is still below the long-term average of 100, underlining the subdued confidence backdrop. Country dynamics reveal a split picture. While Spain (104.7 after 101.7), France (93.0 after 92.7) and Italy (99.0 after 98.3) showed momentum, Germany (90.3 after 90.7) dragged on overall gains, suggesting uneven resilience across major economies.

At the sectoral level, industry managers anticipate stronger production, yet report weaker order books, signalling potential short-lived optimism. Services saw improved demand expectations but a bleaker view of past business conditions. Consumers, meanwhile, hinted at cautious optimismwillingness to spend rose, though concerns over the broader economy persist.

Employment expectations slipped in the euro area by minus 1.3 to 96.4, particularly in services, retail, and construction, offset only slightly by industry. This labour market cooling, coupled with rising uncertainty, suggests businesses remain wary despite softening price pressures. The overall picture reveals that sentiment is improving at the margins, but Europe's economy continues to walk a tightrope between recovery and caution.

Economic sentiment expected almost flat at 95.1 for September versus 95.2 in the previous report. Industry sentiment seen at minus 10.5 versus minus 10.3. Consumer sentiment seen a bit better at minus 14.9 versus minus 15.5.

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.