In January 2013, the Economic Sentiment Indicator (ESI) increased by 1.4 points in both the EU (to 90.6) and the 17-member euro zone (to 89.2), the European Commission said on January 30.
In the EU, confidence improved in services, construction, retail trade and among consumers, while deteriorating slightly in industry.
In the euro area, confidence picked up in construction, services and among consumers and remained broadly unchanged in industry and retail trade. In both regions, the ESI rose for the third consecutive month but remains well below its long-term average.Among the seven largest EU member states, the ESI registered increases in Germany (+2.5), the Netherlands (+1.0), Spain (+0.5) and the UK (+0.5). It remained unchanged in Italy and broadly stable in France ( 0.3), while deteriorating in Poland (-1.3).
At the same time, in January 2013, the Business Climate Indicator (BCI) for the euro area remained broadly unchanged at -1.09. While their assessment of current order books (overall and export) worsened, industry managers became less pessimistic in their production expectations and assessments of both past production and adequacy of stocks of finished products.
As to the ESI, confidence in industry deteriorated slightly in the EU (-0.5) and remained broadly stable in the euro area (+0.3). The benign development in the euro area is due to more positive assessments of stocks of finished products and better production expectations, while the assessment of the current level of overall order books deteriorated. In the EU, the decline in confidence was driven by more negative assessments of stocks of finished products and current levels of overall order books, while production expectations remained unchanged. In both areas, the current level of export order books was assessed markedly more negatively. Managers’ assessment of their companies’ past production improved slightly in the euro area and remained unchanged in the EU.
Confidence in services increased (markedly) in the EU (+3.7) and the euro area (+1.0), fuelled by higher demand expectations and a better assessment of the past business situation.
Managers’ views on past demand improved in the EU and remained broadly stable in the euro area. Confidence in retail trade increased in the EU (+0.8) and remained broadly unchanged in the euro area (+0.3).
In the EU, business expectations improved and the volume of stocks was seen more positively while the perceived present business situation remained broadly stable. In the euro area, the strong increase in the expected business situation more than offset the more negative assessments of the current volume of stocks and present business situation.
Confidence in the construction sector improved markedly in both the EU (+3.9) and the euro area (+4.6). In both areas, the increase was driven by both components of the confidence indicator, i.e. order books and employment expectations.
Employment prospects were assessed less pessimistically across all sectors in both regions. However, for industry and services in the euro area, improvements were minor. Selling price expectations decreased in both regions and across sectors except for EU retailers, who envisaged price increases.
Consumer confidence increased in both the EU (+2.0) and the euro area (+2.4). These developments are underpinned by all components. In both regions, pessimism about the future general economic situation and unemployment trends eased significantly and respondents’ expectations about their households’ financial situation and their savings over the next 12 months improved.
Confidence in financial services, which is not included in the ESI, increased in both the EU (+1.0) and the euro area (+2.6). The increases were driven mainly by improved assessments of past demand and significantly better demand expectations. Managers’ assessment of the past business situation improved in the euro area and deteriorated in the EU.
In the quarterly survey of the manufacturing industry, carried out in January, 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 October. However, their assessment of new orders was much more positive and export volume expectations were significantly higher. Managers’ appraisal of their competitive position on foreign markets outside the EU improved in the EU but deteriorated in the euro area. The balance of managers reporting more than sufficient, rather than insufficient, production capacity decreased. Accordingly, capacity utilisation improved slightly, to 77.6 per cent in the EU and 77.2 per cent in the euro area.
(Winter Dawn: Photo: Grethe Boe/sxc.hu)