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EC spies pockets of light in gloomy European economic outlook

Economic Sentiment Indicator up 0.7 percentage points in March across EU and 0.8 percentage points across the European area


Pete Carvill

New statistics from the European Commission (EC) have identified a small uptick in economic sentiment across the continent.

The EC’s Economic Sentiment Indicator (ESI), rose 0.7 percentage points in March across the European Union (EU) and 0.8 percentage points across the European area, reaching 96.2 and 96.3, respectively. For its part, the Employment Expectations Indicator (EEI) remained stable in both areas, rising by 0.1 percentage points. The EC noted, however, the EEI had scored above its long-term average.

“In the EU, the uptick in the ESI was driven by improved confidence among retailers, consumers and, to a lesser extent, services and industry managers, while confidence remained stable in construction,” the EC said. “Among the largest EU economies, the ESI improved markedly in France (+2.6), and to a lesser extent in Italy (+1.5) and Germany (+0.9). It deteriorated in the Netherlands (-0.7) and Spain (-0.4) and remained broadly stable in Poland (+0.3).”

It added: “The Employment Expectations Indicator remained virtually unchanged above its long-term average. Lower employment plans among services managers were counterbalanced by improved employment plans in retail trade and construction. Employment plans among industry managers remained virtually stable. Consumers’ unemployment expectations, which are not included in the headline indicator, improved.”

Diverging uncertainty

Elsewhere, the EC’s Economic Uncertainty Indicator decreased by 1.1 percentage points in March, indicating lower uncertainty among consumers about the future financial situation. Despite this, there was increased uncertainty among retail managers.

According to the EC, the ESI is a composite indicator combining judgements and attitudes of businesses – in

industry, construction, retail trade and services – and consumers by means of a weighted aggregation of standardised input series. The EEI, meanwhile, is constructed as a weighted average of the employment expectations of managers in four surveyed business sectors – industry, services, retail trade and construction.