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October 2010: Economic Sentiment Improves Further in Both the EU and the Euro Area
added: 2010-10-29
The majority of Member States reported improvements in sentiment. Among the seven largest Member States, France registered the most significant increase (+3.4), followed by the Netherlands (+2.8). Improvements were less pronounced in Poland (+0.5), Germany (+0.3), Italy (+0.3) and in the UK (+0.3). In contrast, sentiment worsened slightly in Spain (-0.2). France, Germany, the Netherlands and the UK are all above their long-term average.
Sentiment in industry, which increased by 2 points in the euro area and by 1 point in the EU, was the main driver of the overall improvement. Gains in confidence in this sector were broad based while reflecting in particular sizeable improvements in order books and production expectations. Industrialists' employment expectations have also become more upbeat, particularly in the euro area. The quarterly manufacturing survey (also released this month) indicates a strong improvement in export volume expectations. In contrast, the increase in capacity utilisation edged up only modestly. Capacity utilisation now stands at about 78% in both the EU and the euro area, still below the long term average (81%).
As indicated in the flash estimate released on 21 October, confidence remained broadly unchanged among consumers. Confidence in services remained broadly unchanged. Sentiment in the retail sector increased by 1 point in the EU, mainly driven by a buoyant assessment of the present business situation in the UK, and remained unchanged in the euro area. Sentiment in construction increased by 1 point in both regions.
Confidence in financial services –not included in the ESI– recorded the second drop in a row in both the EU and the euro area (-1 and -3, respectively), driven mainly by a more negative assessment of the business situation over the past 3 months.
