European Commission Economic Sentiment Indicator and Capacity Utilisation, January 2023:  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 used) make up its Economic Sentiment Indicator (ESI).  The other point to note is that although labelled as “January 2023” or “Q1-2023”, the data collection period was 1st to 23rd January so the data really refers to December or Q4-2022.

There was a further recovery in the headline ESI for both the EU and the Euro-zone with the latter, in particular, now very close to its long-run average at 99.9 (the EU measure is at 98.0, its highest since June 2022).  All of the sectors except construction saw an improvement in their confidence indicator in January.

The improvement in industry confidence came from a rise in expectations for output over the coming 3 months and a lower level of stocks of finished products, although the assessment of overall order books was unchanged from its December level.  Of the other questions in the survey that are not used in the confidence calculation, there was a firm improvement in export order books but a decline in output over the past 3 months.

Among the major EU economies, there was a strong improvement in the ESI for France, Spain, Germany and Italy, a small increase for the Netherlands but no change for Poland.  Most countries, but not all, countries saw an improvement in their ESI reading but only 9 were above the long-run average, suggesting that there is still some way to go in the current recovery.  Of these 9, 3 counties – Ireland, Malta and Spain – moved above the average/base level with the improvement in January, joining Bulgaria, Croatia, Cyprus, Greece, Italy and Romania in positive territory.  This survey also includes the candidate countries with Albania and Montenegro also having an ESI above 100.

Like the CBI survey that we reported last week, this is one of the quarterly reports that gives us data on capacity utilisation.  Despite the improvement in sentiment that we have seen over the past couple of months, capacity utilisation fell marginally in both the EU and the Euro-zone, although it remains well above the long-run average in both cases.

There was a similar decline for Italy and Spain, with slightly larger reductions in Germany and France;  however, looking at the latest figures compared to the long-run averages for each country (you can’t make direct comparisons for levels between countries), Germany and Italy are above their average, but Spain and France are below theirs.  The UK lies in the middle of these trends with the CU reading unchanged from the previous quarter and right on the long-run average.

You can download the EC report and statistical annex from their web-site at (open the drop down menu for 2023) or you can request it from MTA.


European GDP, 4th Quarter and 2022:  The preliminary flash estimate of GDP from Eurostat shows that GDP in the EU was unchanged from the 3rd quarter figure, with a rise of +0.1% for the Euro-zone.  We are, therefore, seeing growth slow in Europe but it has postponed the start of the recession until 2023 (assuming that the figures are not revised down when the update is released in a couple of weeks’ time).

For 2022 overall, this would give growth rates of +3.6% for the EU and +3.5% for the Euro-zone.  This largely reflects the strong first half of the year when the economy was still in recovery from the Covid pandemic and the annualized rate has slowed significantly during the year.

At this stage we only have the figures for a few countries;  there was a quarter-on-quarter fall in GDP in Czechia, Germany, Italy, Lithuania, Austria and Sweden, but only the first of these had a negative figure for the 3rd quarter and, therefore, meets the technical definition of being in a recession.  Latvia, which had a negative 3rd quarter, managed a small positive for Q4 and so avoids this situation;  the strongest growth is in Ireland.

For more details, you can download the Euro-indicators report from their website at (31 January).

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