The European Commission report dated January 2026 shows a significant improvement in the ESI for both the EU and the Euro-zone compared to December 2025, although it is still below the long-run average in both cases. Industry confidence also continued to improve but in level terms remains among the weakest of the sectors. Capacity utilisation rates weakened compared to the previous quarter but are higher than a year ago.
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 upturn in the ESI was driven by confidence improving among industry, services, retail trade and consumers, with the construction sector the only one to see a decline compared to the “December“ reading. Among the major economies, there was a substantial improvement in France, a significant one in Germany, Poland and the Netherlands, with more modest but still noticeable increases in Spain and Italy.
For the industry sector, the calculation of confidence uses three questions – production over the coming 3 months, the current level of order books and an assessment of stocks of finished products – with all three of these contributing to the improvement in confidence. The survey includes two other questions which are not included in the calculation and here, these is a contrast with the other results as the assessments of both export order books and output over the previous 3 months weakened slightly.
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. There were 16 Member States have an ESI at or above 100 in this survey – these were Bulgaria, Croatia, Cyprus, Czechia (back in the list after one weak month), France (for the first time since March 2024), Greece, Ireland, Italy, Lithuania, Malta, the Netherlands, Poland, Portugal, Slovenia, Spain and Sweden – in addition, Latvia and Hungary dropped below the baseline in the “January” figures. The EU candidate countries also participate in this survey; Albania and Montenegro were above their long-run average in the latest figures but both North Macedonia and Turkiye dropped back below the threshold.
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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. For the EU, the CU rate slipped very slightly but has been broadly stable for four quarters – it is, however, below its long-run average. The latter part of that statement is also true for the Euro-zone but this sub-region has seen more volatility, with a modest decline recorded in the latest “Q1-26” reading.
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 in the Netherlands, Poland, Hungary, Austria and Spain; it was broadly stable in Sweden but fell (again in order) in Belgium, France, Germany and Italy. However, among this group, only Poland and Spain have a rate that is above their long-run average.
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* Note that although dated January 2026, the data collection period running from 1st to 22nd of that month, the trends really refer to December 2025 and the 3-month periods ending in and following after this month; this corresponds to the quarters of the calendar year with Q4-25 in the past and Q1-26 in the future. Similarly, the quarterly data, which is labelled as “Q1-26” really refers to the position at the end of Q4-25.
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.