In January the Economic Sentiment Indicator (ESI) increased by 0.5 points in the euro area (to 100.9)
and by 0.9 points in the EU (to 104.7). While the upward trend observed
since May 2013 has been continued, the magnitude and sectoral scope of
the improvement in confidence has moderated somewhat.
Economic sentiment indicator (s.a.)
January EU: 104.7 - Euro Area: 100.9
Euro area developments
In the euro
area, the ESI's increase was driven by improved confidence in services,
retail trade and among consumers. By contrast, confidence weakened in
industry and construction. Economic sentiment improved in two out of the
five largest euro area economies, i.e. Germany (+0.7) and France
(+1.1), remained broadly stable in Spain and Italy and deteriorated in
the Netherlands (-1.0).
Industry confidence registered a small decrease (-0.5), resulting from managers' worsened assessment of the stocks of finished products. Their production expectations and assessment of the current level of overall order books were virtually unchanged. Also managers' assessments of the past production and the current level of export order books, which are not included in the confidence indicator, remained broadly stable in January. The strong increase in services confidence (+1.9) resulted from improved assessments of demand expectations and the past business situation, while the assessment of past demand was virtually unchanged. Consumer confidence
improved markedly (+1.8) and is above its long term-average for the
first time since July 2011. This was mainly thanks to improving
expectations about unemployment and the future general economic situation. Albeit to a lesser degree, also consumers' views on the future financial situation of their households improved while their assessment of savings over the next 12 months remained unchanged. Retail trade confidence increased markedly (+1.6) thanks to improvements in all its three components: managers' present and expected business situation and their assessment of the volume of stocks. Meanwhile, confidence in the construction sector decreased strongly (‑3.7), resulting from managers' markedly worsened assessment of order books and a less important downward revision of employment expectations. Financial services confidence (not included in the ESI) increased by 4.1 points. While the past business situation and demand expectations were assessed markedly more positively, the assessment of past demand worsened.
Employment plans
were revised upwards in services and retail trade. They remained
virtually unchanged in industry but worsened somewhat in construction. Selling price expectations
decreased in retail trade and construction, while remaining broadly
unchanged in industry and services. Consumers' price expectations for
the next 12 months remained flat.
EU developments
In the wider
EU, the improvement in sentiment was slightly more pronounced (+0.9).
The ESI improved in the two largest non-euro area EU economies, Poland
(+1.7) and the UK (+1.0). On a sector basis, as in the euro area,
confidence improved in services, retail trade and among consumers and
decreased slightly in industry. Confidence in the wider EU construction
sector remained stable. The main reason for this difference compared to
the euro area was markedly improving construction confidence in the UK.
Employment
plans in industry were more upbeat EU-wide than in the euro area; on the
other hand, employment plans in services were revised downwards
somewhat. Concerning selling prices, the main differences to the euro
area were lowered expectations in services, while expectations of
construction managers remained flat. Consumers' price expectations were
revised downwards.
Quarterly survey in manufacturing (conducted in January)...
In the euro area manufacturing sector, the estimated rate of capacity utilisation increased markedly to 80%. Accordingly, the share of managers assessing their current production capacity
as 'not sufficient' (in view of current order books and demand
expectations) increased. Also managers' assessment of developments in
overall new orders and their export volume expectations improved. In line with these findings, managers' appraisal of their competitive position on foreign markets outside the EU improved compared with the previous survey carried out in October. The number of months' production assured by orders on hand remained unchanged. Developments in the wider EU were largely in line with euro area developments.
Retail trade confidence indicator (s.a.)
January EU: 2.0 - Euro Area: -3.4
