European Commission Economic Sentiment Indicator, August 2022:  The European Commission (EC) draws from a range of surveys to construct confidence indicators for six sectors of the economy and then uses five of these (financial services is not part of the calculation) to make up its Economic Sentiment Indicator (ESI).

The results for August saw another fall in the ESI for both the EU and the sub-set of Euro-zone countries with a significantly weaker level of confidence in the industry sector the main driver of this, although there was also a more modest reduction for services.  Confidence in the construction and retail trade sectors edged up and there was a noticeable improvement in consumer confidence;  the financial service sector, which is not included in the overall ESI calculation picked up very sharply.

In the industry sector, confidence fell for the 6th month in a row thanks to another sharp fall in the survey respondents’ assessment of order books and the view that stocks of finished products were more abundant (pointing to weaker sales).  Countering this, expectations for output over the coming 3 months improved slightly.  Two other questions are reported, although they are not used in calculating the confidence indicator;  both of these – output over the past 3 months and export order books – deteriorated significantly.

Among the 6 largest EU economies, the ESI fell very sharply in the Netherlands, was down significantly in Germany and France and posted a more modest reduction in Italy;  only Spain saw an increase in August and this was relatively small.

The ESI is calculated against a base set by the long-run average reading so this is adjusted marginally each month when the new reading is recorded.  Most EU countries currently have an ESI reading below 100 (the long-run average level) with Croatia, Greece, Italy (just), Portugal and Romania (just) the exceptions where it is over 100;  the EU candidate countries are also included in this survey and here the list of those with an ESI above 100 is joined by Albania and Montenegro.

You can download the EC report and statistical annex from their web-site at or you can request it from MTA.

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