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Euro area developments
The deterioration of euro-area sentiment resulted from lower confidence in industry, services, construction and among consumers, while confidence improved slightly in retail trade. The ESI weakened in all the five largest euroarea economies; significantly so in Spain (−3.0), France (−2.0), Germany (−1.9) and Italy (−1.4) and, marginally so, in the Netherlands (−0.3). The marked decrease in industry confidence (−2.3) resulted from managers' more pessimistic views on all three components, i.e. production expectations, the current level of overall order books, and, to a lesser extent, the stocks of finished products. Managers' assessments of the past production and export order books – which are not included in the confidence indicator – deteriorated, too. Also the marked decline in services confidence (−1.4) was driven by managers' more pessimistic views on all three components: the past business situation, and both past and expected demand. Consumer confidence decreased markedly (−2.3) due to a deterioration of all its components, i.e. consumers' unemployment and savings expectations and their views on their future financial situation and the future general economic situation; the decrease in the latter was particularly strong. The slight increase in retail trade confidence (+0.5) resulted from more positive views on the present business situation, and the adequacy of the volume of stocks, while managers’ expectations about the business situation weakened. Decreasing construction confidence (−1.0) resulted from managers' worsening employment expectations, while their assessment of the level of order books improved. Finally, the rise (+2.2) in financial services confidence (not included in the ESI) resulted from improved appraisals of past demand and the past business situation, which were only partly offset by a deterioration in managers' demand expectations.
Employment plans worsened markedly in construction and, to a lesser extent, in services and retail trade, while they remained unchanged in industry. Selling price expectations increased markedly in retail trade, construction, industry and, to a lesser extent, services. By contrast, consumer price expectations dropped in December.
EU developments
The marginally smaller decline of the headline indicator for the EU (−2.0) can be attributed to virtually unchanged sentiment in the largest non-euro area EU economy, the UK (+0.1), while the ESI decreased markedly in Poland 2 (−1.2). EU confidence deteriorated markedly in line with the euro area in industry, services, construction and among consumers, and also weakened in retail trade. As regards financial services confidence, the EU aggregate improved less markedly than in the euro area. Managers' employment expectations were in line with those for the euro area for the services and construction sectors, where they worsened, and in industry, where expectations remained stable; in contrast to the euro area employment expectations remained broadly unchanged in retail trade. The evolution of price expectations in the EU mimicked those in the euro area, with increases in all business sectors on the one hand and a drop among consumers on the other hand.