Economic Sentiment Indicator Tumbles in EU, Euro Area

Business | September 29, 2014, Monday // 13:58|  views

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In September the Economic Sentiment Indicator (ESI) decreased in both the euro area (by 0.7 points to 99.9) and the EU (by 1.0 point to 103.6).

The euro-area indicator fell slightly below its long-term average of 100, which it had surpassed only in December 2013. The negative developments in the EU and the euro area indicator mainly reflect more cautious views of consumers and the retail trade sector, the European Commission noted in its latest report.

Bulgaria's consumer confidence in the industry sector dropped from -0.4 points to -2.5 points, while the services sector confidence declined to +9.5 from +15.4 points in August. Confidence in Bulgaria's construction sector saw a drop from -31.1 points to -33.7 points.

Meanwhile, the EC survey has recorded a slight improvement in retail trade confidence which reached -6.7 points from -7.2 points in August.

In the euro area, lower readings of retail trade and consumer confidence were only partly offset by positive signals from the construction sector. Industry and services confidence remained virtually unchanged. Amongst the largest euro-area economies, sentiment increased only in Spain (+0.5), while it remained broadly flat in the Netherlands (+0.3), France (+0.2) and Germany (-0.3) and shed in Italy (-0.9).

Consumer confidence booked the fourth month-on-month decline in a row (-1.4) propelled by consumers' increased pessimism about future unemployment, the future general economic situation and, less so, the level of future savings.

The sharp drop in retail trade confidence (-2.6) owed to more negative assessments of all components of the indicator, namely the expected and present business situation, as well as the adequacy of the volume of stocks. Construction confidence brightened (+0.7) as a consequence of significantly improved assessments of the level of order books in combination with broadly unchanged employment expectations. Dropping by 1.9 points, financial services confidence (not included in the ESI) continued the broad downward trend observed over the last 3 months.

Employment plans were only revised downwards in retail trade, while they remained virtually unchanged in industry and construction and even improved in services.

With sentiment slipping in the largest EU economies outside the euro area (UK: -0.9, Poland: -0.4, Sweden: -2.6), the EU headline indicator shed somewhat more in the EU (-1.0) than in the euro area. In line with euro-area developments, confidence only strengthened in the construction sector, while remaining unchanged in services and fading in the retail trade and financial sector, as well as among consumers.

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Tags: retail trade, industry, construction, consumer, confidence, Bulgaria, Euro Area, EU, economic sentiment, financial sector


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