The December release of the Economic Sentiment Index (ESI) compiled by the European Commission was broadly stable for the EU (-0.1 points) but fell a little (-0.4 points) in the Euro-zone. The change for the EU came about because an improvement in confidence for industry was balanced by a decline in the retail trade, while consumers, services and construction were unchanged.
The European Commission (EC) draws from a range of surveys to construct confidence indicators for five sectors of the economy and then uses these to calculate its Economic Sentiment Indicator (ESI) which is converted to an index based on the long-run average (so 100 is the key number in this index for historical comparisons). Although dated December, the data collection period was from 1st to 19th of that month so the trends really refer to November and the 3-month periods of September to November (past) and December 2025 to February 2026 (future).
For both the EU and the Euro-zone, the ESI remains below its long-run average – and it has been running below this level since the middle of 2022.
The calculation of confidence for the industry sector is based on three questions – the current level of order books, production expectations for the coming three months and stocks of finished products. There was a marked improvement in the first two of these, which was partly offset by a deterioration in the assessment of stocks. There are two other questions which are not included in the calculation of confidence for the industry sector; there were more benign views about the level of output over the previous 3 months and respondents were less pessimistic in their assessment of export order books.
Among the larger EU economies, the ESI fell noticeably in Germany and France, with more modest reductions in Italy and Spain; in contrast, there was a clear improvement in Poland, with the Netherlands also up, but to a lesser extent.
The ESI is calculated against the long-run average, so we can look at the position of the individual countries against their own historical situation as this is the best way to compare between countries. In December, 14 EU Member States have an ESI above 100; they are Bulgaria, Croatia, Cyprus, Greece, Ireland (new this month), Italy, Latvia, Lithuania, Malta, the Netherlands, Portugal, Slovenia, Spain and Sweden (also back above 100 this month); in addition, Poland moved up to sit exactly on the 100 mark, while Luxembourg dropped out of this list compared to November. The EU candidate countries also participate in this survey; among them, Albania, Montenegro and North Macedonia have an ESI reading above their long-run average, with Serbia and Turkiye missing from this group.
You can download the EC report and statistical annex from their website at https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/business-and-consumer-surveys/download-business-and-consumer-survey-data/press-releases_en (open the 2025 box) or you can request it from MTA.