Economic sentiment declined further in the euro zone in October 2012, as did business sentiment, going by European Union statistics.
In October the Economic Sentiment Indicator (ESI) remained unchanged in the EU, at 86.2, and declined by 0.7 points in the euro area, to 84.5. In the EU, marked declines in the industry and construction sectors were offset by improvements in services and retail trade. Consumer confidence remained broadly unchanged. In the euro area, marked decreases in industry and construction outweighed the improvement in the retail trade sector, while confidence in services and among consumers remained broadly stable. Overall, the decrease in the ESI has lost pace since September in both areas and has even come to a halt in the EU in October. Although most EU member states witnessed a drop in economic sentiment, this was only the case for three out of the seven largest EU countries: the ESI registered falls in Poland (-2.8), France ( 1.8) and Germany (-1.4). However, the ESI continued last month’s recovery in the UK (+5.2) and Spain (+1.8) and rose slightly in the Netherlands (+0.8) and Italy (+0.5).
Confidence in industry continued the downward trend reported since March. The confidence indicator decreased by 1.2 points in the EU and 2.1 points in the euro area. In both regions, the decline is mostly because of a much more negative assessment of the current level of overall order books. In the euro area also the other two components (production expectations and stocks of finished products) worsened, while in the EU, managers’ production expectations remained broadly stable and their assessment of stocks of finished products improved. In both areas, managers’ assessment of their companies’ past production and current level of export order books deteriorated markedly, too. Confidence in services improved in the EU (+0.7) and remained broadly unchanged in the euro area. In both areas, managers’ demand expectations improved while their assessment of past business situation remained broadly unchanged. Views on past demand improved in the EU as well, but deteriorated in the euro area. Confidence in retail trade picked up in both the EU (+2.4) and the euro area (+1.1). In both areas, the present business situation and the development of the current volume of stocks were viewed more positively, while the assessment of the expected business situation improved in the EU but declined in the euro area. Confidence in the construction sector decreased in both the EU (-2.6) and the euro area (-1.2). In the EU, the decrease was attributable to a more negative assessment of both order books and employment expectations. In the euro area views on the first component remained broadly stable.
In both regions, employment plans were further revised downwards by retail trade and construction managers. In the industry and services sectors employment plans were revised upwards in the EU, but downwards in the euro area. Selling price expectations decreased or remained stable in all sectors but industry, where managers expect price increases.
Consumer confidence remained broadly stable in both the EU (-0.3) and the euro area (+0.2). While consumers in both areas viewed the future general economic situation less pessimistically, their unemployment expectations worsened. In the EU, consumers’ expectations about their households’ financial situation and their savings over the next 12 months remained broadly unchanged, while both improved in the euro area.
Confidence in financial services, which is not included in the ESI, increased strongly in both the EU (+8.7) and the euro area (+7.4). The increases were driven by markedly improved assessments of the past business situation, past demand and demand expectations.
In the quarterly survey of the manufacturing industry, carried out in October, industrial managers in the EU and the euro area reported no changes in the number of months of production assured by orders on hand compared with the previous survey carried out in July. However, their assessment of new orders and export volume expectations decreased markedly. Managers’ appraisal of their competitive position on foreign markets outside the EU remained broadly stable in the EU and improved slightly in the euro area. The balance of managers reporting more than sufficient, rather than insufficient, production capacity increased further. Accordingly, capacity utilisation decreased, to 77.3% in the EU and 76.8% in the euro area.
In October 2012, the Business Climate Indicator (BCI) for the euro area decreased by 0.28 points to 1.62. The decline was driven by markedly worsened assessments of order books (overall and export) and past production. Managers’ production expectations and their assessment of the adequacy of their stocks of finished products also worsened, according to figures released on October 30 by the European Commission.
InBulgaria’s, the overall business climate indicator decreased by 2.7 per cent in October 2012 compared with September, according to the National Statistical Institute (NSI). The decrease was because of the more unfavourable business climate in all observed sectors – industry, construction, retail trade and services, the NSI said.
Bulgaria’s business climate in industry was 3.6 per cent down from September which was because of more reserved managers’ assessments and expectations about the business situation of the enterprises. Bulgaria’s business climate in construction worsened by 2.9 per cent because of shifting of the managers’ expectations about the business situation of the enterprises over the next six months from becoming better towards remaining the same. The business climate in retail trade decreased by 1.8 per cent in comparison with September which is because of the more moderate retailers’ expectations about the business situation of the enterprises over the next six months. The composite indicator “business climate in the service sector” decreased by 1.3 per cent compared to September.
(Photo: Simona Dumitru/sxc.hu)