The ESI compiled by the European Commission fell again in the April dated report for both the EU and the sub-set of the Euro-zone, with industry confidence broadly stable. Capacity utilisation edged up but remained below its long-run average. The latest investment expectations improved from the previous 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. You should note that although dated April 2025, the data collection period ran from 1st to 22nd of that month, so the trends really refer to March; similarly, the past 3 months cover January to March 2025 (Q1) and the coming period runs from April to June (Q2).
As noted above, industry confidence was only marginally lower (effectively within the margin of error of being stable). This calculation uses three questions and of these, a sharp decline in managers’ production expectations over the coming 3 months was offset by an improvement in the current level of order books and, to a lesser extent, in the stocks of finished products. The survey generating this data has two other questions which are not included in the calculation; for these, output over the previous 3 months improved noticeably but export order books were slightly weaker.
Amongst the largest EU economies, the ESI improved modestly in Germany (+0.5 points and Spain (+0.4 points), was stable in France and Poland but fell significantly in Italy (-1.8) and the Netherlands (-2.0).
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. Overall, only 10 Member States (down from 14 in the March dated survey with Czechia, Denmark, Ireland and the Netherlands falling below the threshold) have an ESI at or above 100 in this survey – these were Bulgaria, Croatia, Cyprus, Greece, Lithuania, Malta, Poland, Portugal, Romania and Spain. The EU candidate countries also participate in this survey and here, Albania and Montenegro also above their respective long-run average level.
As with the CBI survey that we reported last week, this survey has an update of the capacity utilisation levels in the manufacturing sector. This improved a little for both the EU and the Euro-zone – indeed, the latter was at its highest for a year – but both remain below their long-run averages. Among the major industrial nations, capacity utilisation was slightly higher than in the previous survey for France, Germany and Italy but fell sharply in Spain. At the next level, it improved in Belgium, Czechia, Hungary, Ireland and Poland, was stable in the Netherlands and fell slightly in Sweden. Ireland and Poland are the only countries where the current level is above the long-run average (back to 2000), although Italy is exactly on this mark.
Finally, this report also features the results of the latest investment intentions survey; this is done on a different basis to the question in the CBI survey for the UK manufacturing sector but is, nonetheless, useful for those with an interest in European operations. The survey is relatively short-term and currently only covers the outlook for 2025, but there was a noticeable improvement in the balance for investment this year compared to the survey six months ago. Among the major nations, the largest improvement was in Germany – this could be related to the commitment to increase defence spending over the next few years – with France and Italy also ahead of the previous value; in contrast, the balance fell slightly in Spain but, in level terms, it is still the highest of 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. We can also send you our analysis of the capacity utilisation data and the result of the biannual investment survey.