The European Commission report dated April 2026 recorded a sharp drop in the ESI for both the EU and the Euro-zone compared to the previous month. This was mainly driven by a sharp fall in consumer confidence, with industry confidence broadly stable. Capacity utilisation in industry edged up compared to January but remained below its long-run average. There was a moderately positive outlook in the bi-annual investment survey.
The European Commission draws from a range of surveys to construct confidence indicators for five sectors of the economy and then uses these to calculate up its Economic Sentiment Indicator (ESI) which is converted to an index based on the long-run average. The reports in January, April, July and October also include data on capacity utilisation and twice a year (April and November), including this time, there is an assessment of the investment outlook – we will cover each of these factors in turn.
Note that although dated April 2026, the data collection period ran from 1st to 23rd of that month, so the trends really refer to March and the 3-month periods ending in and following after this month; this corresponds to the quarters of the calendar year with Q1-26 in the past and Q2-26 in the future. Similarly, the quarterly data, which is labelled as “Q2-26” really refers to the position at the end of the 1st period of 2026.
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As noted above, the fall in the ESI was driven by consumer confidence collapsing, with the service and retail trade sectors also significantly weaker than in the previous month. Although not stated specifically, it seems likely that this relates to the rise in fuel prices after the outbreak of war in the Middle East. Industry confidence was broadly stable, while construction edged down slightly.
Among the major economies, there was a substantial decline in the ESI for Germany, France, Italy and the Netherlands (all of which are now below their long-run average), with a more muted reduction in Spain and Poland which are both still just positive.
As noted above, 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 – this is the best way to compare between countries. In these results, only 8 Member States have an ESI at or above 100 – these were Croatia, Czechia, Greece, Lithuania, Malta, Poland, Portugal and Spain; Italy, Latvia and the Netherlands dropped below the baseline in the “April” figures having been above it in “March”. The EU candidate countries also participate in this survey; only Montenegro was above their long-run average in the latest figures, with both Albania and North Macedonia dropping back below the threshold.
For the industry sector, the calculation of confidence uses three questions; there was a sharp fall in the assessment of production over the coming 3 months but this was offset by an improvement in the current level of order books and an assessment of stocks of finished products. The survey includes two other questions which are not included in the calculation with a marked improvement in output over the previous 3 months, while export order books were broadly unchanged.
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This was one of the surveys conducted every 3 months that also includes an update on the level of capacity utilisation (CU) in the manufacturing sector. As noted in the introduction, the CU rate edged up for the EU but remains below its long-run average. For the Euro-zone there was a more marked increase which took it to the highest level for two years but this was also not enough to move it above the long-run trend level.
Direct comparisons of levels between countries are not valid as they have different “natural” rates so the best way of making comparisons is to relate it to the respective long-run average.
Compared to 3 months ago, among the larger EU manufacturing countries, the CU rate improved, in order of size of the increase, in France, Germany and Italy, but in all three the rate is still below the long-run average (although getting close to it for France and Italy). In contrast, Spain saw its CU rate fall in the latest results but this remains above the long-term trend level.
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In industry, the outlook for investment in 2026, which had been modestly positive in the survey last Autumn, improved slightly for both the EU and the Euro-zone in the Spring results. There is a wider spread of both trends and the change since 6 months ago at the country level. For example, while France was amongst the most optimistic about investment this year last Autumn, the pace of that optimism was lower in the latest results; in contrast, Germany was among a minority of countries to have a negative view of investment prospects 6 months ago but has now improved to a neutral position.
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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 2026 menu) or you can request it from MTA.