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EMU: EC Economic Sentiment
| Consensus | Consensus Range | Actual | Previous | Revised | |
| Economic Sentiment | 96.0 | 94.5 to 96.8 | 96.9 | 95.0 | 95.4 |
| Industry Sentiment | -7.0 | -8.0 to -7.0 | -6.1 | -7.7 | -7.5 |
| Consumer Sentiment | -15.9 | -15.9 to -15.9 | -15.9 | -17.7 | -17.6 |
Highlights
July’s economic sentiment indicator of 96.9 present a broadening but incomplete European recovery. The third consecutive increase in economic sentiment, alongside improvements across industry, services, retail and consumers, suggests that confidence is becoming more firmly established. Gains in France, the Netherlands and Germany also indicate renewed momentum among major economies.
Employment expectations improved even more sharply, supported by stronger recruitment plans across every surveyed sector and falling consumer unemployment concerns. This suggests that businesses increasingly expect the recovery to translate into labour demand. However, both the economic sentiment indicator and the employment expectations indicator remain below their long-term benchmark of 100, meaning confidence is still weaker than normal.
Construction remains the principal vulnerability as declining order books outweighed better employment intentions, contrasting with strengthening industrial production and export expectations. Meanwhile, falling selling-price and consumer inflation expectations provide encouraging disinflationary signals. Yet their continued position above historical averages show that price pressures have not disappeared.
The simultaneous decline in economic uncertainty reinforces the positive direction. In summary, Europe appears to be moving from caution towards recovery, but weak construction activity, below-average confidence and elevated price expectations indicate that the recovery remains fragile rather than fully secured. These latest updates take the RPI to 38 and the RPI-P to 44, meaning economic activities are now outperforming market expectations in the euro area.
Market Consensus Before Announcement
Economic sentiment expected at 96.0 in July.
Definition
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.
Description
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.