In April, the Economic Sentiment Indicator (ESI) remained unchanged in the euro area (at 112.7 points) and broadly stable in the EU (-0.3 points to 112.3). The indicators stabilised following three consecutive drops and remain at elevated levels.
Euro area developments
Unchanged euro area sentiment resulted from drops in the retail trade, services and construction sectors which were counterbalanced by industry confidence holding broadly steady and consumer confidence edging up. Amongst the largest euro area economies, the ESI rose markedly in Spain (+1.6) and France (+1.1), while it remained stable in Germany (+0.0), decreased slightly in Italy (-0.4) and dropped strongly in the Netherlands (-2.3).
Broadly stable industry confidence (+0.1) was the result of managers' markedly improved production expectations meeting a worsened assessment of the current level of overall order books, while their assessments of the stocks of finished products remained virtually unchanged. Of the questions not included in the confidence indicator, both managers' assessment of past production and export order books worsened markedly. The decline in services confidence (-1.0) was driven by managers' significantly worsened assessment of the past business situation, and more pessimistic appraisals of past demand, while their demand expectations remained stable. Edging up consumer confidence (+0.3) reflected households' historically optimistic expectations regarding future unemployment, improved savings expectations and slightly brighter views on their future financial situation being partly offset by their markedly more negative assessment of the future general economic situation. The drop in retail trade confidence (-1.3) was fuelled by markedly deteriorating appraisals of the past business situation and worsening views on the adequacy of the volume of stocks, while managers' expectations regarding the future business situation remained broadly flat. The slight decrease in construction confidence (-0.7) resulted from downward revisions in both managers' employment expectations and their assessment of the level of order books. Finally, financial services confidence (not included in the ESI) held broadly steady (+0.3) as a result of a strong improvement in managers' assessment of the past business situation being almost offset by markedly worsened appraisals of past and expected demand.
Employment plans saw a downward revision in industry and construction, but remained broadly unchanged in services and the retail trade sector. Selling price expectations decreased markedly in construction and industry and, more slightly so, in retail trade, while they increased in services. Consumer price expectations remained flat in April.
EU developments
The marginally weaker outcome for the headline indicator for the EU (-0.3) resulted from slightly deteriorating sentiment in both the UK (-0.4) and Poland (-0.7). While confidence in services and retail trade worsened in line with the euro area, EU industry and construction confidence improved. In contrast with euro area developments, EU confidence among consumers and in the financial services sector fell slightly.
Similarly to the euro area, EU managers in industry reported a slight downward revision in their employment expectations, while they expected – as opposed to the euro area – an improvement in construction and a worsening in services. Price expectations were broadly in line with those in the euro area for industry and construction, where managers expected prices to decrease considerably; however, prices were expected to rise in retail trade and remain broadly stable in services.
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