29 November 2017

November 2017: Economic Sentiment continues to rise in the euro area, broadly stable in the EU

Euro area developments

The increase of the ESI in the euro area resulted from improved confidence among consumers and in the construction sector, partly offset by a decrease registered in the retail trade sector; confidence in industry and services remained broadly unchanged. Amongst the largest euro-area economies, the ESI rose strongly in France (+1.9) and, to a lesser extent, in the Netherlands (+0.8) and Spain (+0.6), while it remained broadly unchanged in Italy (+0.2) and Germany (-0.1).

Virtually unchanged industry confidence (+0.2) resulted from managers' broadly stable assessment of the current level of overall order books and the stocks of finished products, while their production expectations increased slightly. Of the questions not included in the confidence indicator, both managers' assessment of past production and their views on export order books improved. Broadly flat developments in services confidence (+0.1) resulted from managers' slightly brighter demand expectations being offset by their slightly less optimistic assessment of the past business situation; their views on past demand remained broadly unchanged. Positive developments in consumer confidence (+1.2) reflected households' more optimistic assessment of future unemployment, their savings expectations and, to a lesser extent, the future general economic situation and their future financial situation. The decrease in retail trade confidence (-1.3) resulted from a strong deterioration in managers' views on the present business situation, while their assessments of the adequacy of the volume of stocks and the future business situation remained virtually stable. The rise in construction confidence (+1.2) was fuelled by upward revisions in managers' assessment of the level of order books and, to a lesser extent, their employment expectations. Finally, the rise (+1.3) in financial services confidence (not included in the ESI) resulted from improved appraisals of both past demand and the past business situation, which were only partly offset by a deterioration in managers' demand expectations.

Employment plans saw significant upward revisions in retail trade and industry, both indicators reaching the highest levels in more than 30 years. In construction, employment plans improved more moderately, while also reaching a 10-year high. Employment plans worsened slightly in the services sector. Selling price expectations increased markedly in industry, while they decreased slightly in retail trade and services and remained virtually unchanged in construction. Also consumer price expectations increased in November.

EU developments

The headline indicator for the EU remained broadly stable (+0.1), reflecting slipping sentiment in the largest noneuro area EU economy (UK, -1.5), while sentiment in Poland improved slightly (+0.7). In line with the euro area, confidence improved among consumers and remained broadly stable in industry. However, EU confidence improved markedly in retail trade and fell in services and construction. Further in contrast with euro-area developments, EU confidence remained virtually unchanged in the financial services sector.

As in the euro area, EU managers in industry and retail trade reported upward revisions in their employment expectations, while the latter decreased in services and construction. Price expectations in the EU increased strongly in retail trade and industry and, to a somewhat lesser extent, in the services sector, while they decreased markedly in construction.

Industrial investment survey (conducted in October/November)

According to the bi-annual investment survey carried out in October/November this year, real investment in the manufacturing industry is expected to increase by 2% in the euro area in 2017. This is a significant downward revision from the 5% growth managers had expected in the previous survey of March/April 2017. For 2018, managers expect an acceleration in investment growth to 4%. In the EU, real manufacturing investment in 2017 is estimated to grow more than in the euro area (+4%), unchanged from the March/April survey. As regards 2018, EU managers expect another increase in real investment by 4%.

Full press release

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