Economic sentiment, business climate indicators in EU continue upward trend in July 2013

Written by on July 30, 2013 in Business - No comments

In July 2013 the Economic Sentiment Indicator (ESI) increased by 1.2 points in the euro zone (to 92.5) and by 2.4 points in the EU (to 95), continuing the upward trend observed since May, the European Commission said on July 30.

In the euro zone, the ESI’s increase was driven by improved confidence among consumers and managers in industry, services and retail trade. Only in the construction sector confidence weakened. Economic sentiment improved in four out of the five largest euro area economies, i.e. Italy (+2.9), Spain (+1.2), France (+1.2) and Germany (+0.7), while it deteriorated in the Netherlands (-2.0).

The slight increase in industry confidence (+0.6) resulted from improvements in managers’ production expectations and their assessment of the current level of overall order books. The assessment of the stocks of finished products remained virtually unchanged.

Of the surveyed items not included in the confidence indicator, the sharply improving assessment of the past production stands out, the European Commission said.

The assessment of the current level of export order books remained stable.

Services confidence saw the sharpest increase of all sectors covered (+1.8), driven by improved assessments of the past business situation and past demand, while demand expectations remained virtually unchanged.

Consumer confidence improved markedly (+1.4) and for the eighth successive month. This was mainly due to further easing unemployment expectations and better savings expectations over the next 12 months. Consumers’ views on the future financial situation of their households and the future general economic situation also brightened somewhat.

Retail trade confidence increased (+0.9), driven by an improved assessment of the present business situation and business expectations, while views on the volume of stocks remained virtually unchanged.

The construction sector stands out with lower confidence ( 1.0), resulting from managers’ markedly worsened assessment of order books, which failed to be counterbalanced by the more cautious upward revision of employment expectations. Financial services confidence (not included in the ESI) increased by 3.1 points. While the past business situation andpast demand were assessed much more positively, demand expectations deteriorated.

Employment plans were revised upwards in industry, retail trade and construction, while remaining virtually unchanged in services. Selling price expectations increased in industry, while remaining broadly unchanged in services and retail trade and decreasing in construction.

In the wider EU, the improvement in sentiment was more pronounced (+2.4). On a sector basis, the increases in industry, consumer and retail trade confidence were sharper than in the euro area and construction confidence slipped only slightly. On a country basis, the main reason for the sharper plus was markedly improving confidence in the largest non-euro area EU economy, the UK (+6.9). Contrasting with developments in the euro area, the EU financial services confidence indicator declined slightly (-0.4).

As in the euro area, employment plans in the EU were revised upwards across all sectors except for services. Selling price expectations differed in the EU in that they decreased in retail trade and increased in construction. Consumers’ price expectations were revised downwards, in line with assessments in the euro area.

In July 2013, the Business Climate Indicator (BCI) for the euro area increased by 0.14 points to 0.53, the European Commission said.

The assessment of past production improved sharply and also production expectations and the level of overall order books were appraised more positively. The assessment of the level of export order books and the stocks of finished products remained broadly unchanged.

In Bulgaria, the National Statistical Institute said that managers’ assessment of the business climate in the country had improved in July after going down for four months. The main factor that was impeding the development of business remains Bulgaria’s unstable economic climate, according to these statistics.

(Photo: Ivan Philipov)

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