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Economic sentiment in EU, euro zone improves further

Tuesday, Aug 31, 2010

Economic activity in industry in the euro zone should continue to recover in the coming months, although it still has some way to go to reach its pre-crisis level, according to an August 30 2010 media statement by the European Commission on the month’s Business Climate Indicator.

Managers in industry were more optimistic about their order books; in particular they were upbeat about their export order books.

Managers' assessment of production observed in recent months and production and employment expectations remained unchanged. Meanwhile, managers' assessment of their stocks of finished products worsened slightly.

After the surge in July, the Economic Sentiment Indicator (ESI) continued to improve in both the EU and the euro area, albeit at a slower pace.

The ESI rose to 102.7 (up by 0.6 of a point) in the EU and to 101.8 (up by 0.7 of a point) in the euro area. In both the EU and the euro area the ESI is above its long-term average.

Among the largest EU member states, the UK registered the most significant gain (+1.5), followed by Germany (+1.1) which remains in the lead.

Improvements were less pronounced in Spain (+0.9) and in France (+0.4).

In contrast, sentiment deteriorated in Italy (-0.9), Poland (-0.9) and even more so in the Netherlands (-2.1).

Sentiment in industry improved (by one point) in the EU and remained broadly unchanged in the euro zone.

Most respondents in this sector reported sizeable improvements in their order books. However, managers were cautious regarding their production expectations.

As indicated in the flash estimate released earlier, confidence among consumers improved markedly (+3) in both EU and euro area.

Widely-felt optimism about the general economic situation as well as further considerable easing of unemployment fears set the tone.

The confidence indicator in services decreased by one point in the EU and improved by one point in the euro area.

Managers' pessimistic assessment of the past business situation in the UK explains the difference in trends between the two areas, a media statement said.

Sentiment in the retail sector gained one point in the EU and remained broadly unchanged in the euro area. Sentiment indicator in construction remained broadly unchanged in both regions.
After a sharp drop in July, confidence in financial services – not included in the ESI – registered a significant increase in the EU (+7) due to a substantially brighter future demand outlook.

In the euro area the confidence indicator remained broadly unchanged, after having improved in July.

Source: thesofiaecho.com