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29 April 2019

April 2019: Economic Sentiment decreases markedly in both the euro area and the EU


In April 2019, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.6 points to 104.0) and the EU (by 1.5 points to 103.7).

Euro area developments

The deterioration of euro-area sentiment resulted from lower confidence in industry, retail trade and, to a lesser extent, in construction and among consumers, while confidence remained unchanged in services. Amongst the largest euro-area economies, the ESI rose only in the Netherlands (+0.4), while it decreased in France (−1.0) and Italy (−1.0) and, more significantly so, in Germany (−1.5) and Spain (−2.6).

The strong decrease in industry confidence (−2.5) resulted from managers' more pessimistic views on all three components, i.e. production expectations, the current level of overall order books and the stocks of finished products. Of the questions not included in the confidence indicator, manufacturers' assessments of the past production deteriorated significantly, too, whereas there was some relief in the appraisals of export order books. Unchanged services confidence (0.0) resulted from managers' more negative views on the past business situation being offset by brighter demand expectations, while their assessment of past demand remained virtually unchanged. The decrease in consumer confidence (−0.7) reflected households’ more pessimistic expectations about their future financial situation and, in particular, the general economic situation, while their assessments of their past financial situation and their intentions to make major purchases remained broadly stable. The strong decline in retail trade confidence (−1.4) was driven by more negative views on both the present and expected business situation, while retailers’ assessment of the adequacy of the volume of stocks remained broadly stable. Decreasing construction confidence (−0.8) reflected managers' more pessimistic employment expectations, while their assessment of the level of order books improved. Finally, financial services confidence (not included in the ESI) fell (−7.7), reflecting strong deterioration in managers' assessment of past demand and the past business situation, while demand expectations improved.

Employment plans saw a significant deterioration in construction and, to a lesser extent, in industry, while employment plans remained broadly unchanged in services and retail trade. Selling price expectations increased slightly in retail trade, while they decreased markedly in industry and construction and remained virtually stable in services. Also consumer price expectations dropped in April.

EU developments

The commensurate decline of the headline indicator for the EU (−1.5) reflects the strong deterioration of sentiment in the largest non-euro area EU economies, the UK (−1.5) and Poland (−3.7). In line with the euro area, EU industry confidence took a blow and consumer sentiment weakened. While the deterioration of EU confidence in retail trade was less marked than in the euro area, EU confidence in construction worsened more strongly. Yet, EU confidence in services improved slightly. As regards financial services confidence, the drop in the EU aggregate was in line with euro-area developments.

Managers' employment expectations were more optimistic than in the euro area. They remained virtually stable in industry and improved markedly in services and retail trade. In construction, the deterioration of employment expectations was less strong than in the euro area. Price expectations declined in line with those for the euro area in industry and construction; they also decreased in retail trade and services. 

Full press release



© Eurostat


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