The ESI compiled by the European Commission has been on a modest see-saw over recent months, so having improved in July, the August reading slipped back a little. This was due to relatively small downturns for industry, construction, services and consumers which were partly balanced by a similarly modest uptick for the retail trade sector.
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, as with the CBI survey last week, while this is shown as “August”, the data collection period ran from 1st to 21st of that month, so the trends really refer to July, with the 3-month blocks covering May to July (past) and August to October (future).
Industry confidence is measured based on responses to three questions – managers’ production expectations over the coming 3 months, the current level of order books and stocks of finished products. The easing in the latest reading came because the decline in expectations for output was not quite balanced by an improved assessment of current order books, while stocks of finished goods were virtually unchanged.
There are a couple of other questions that are reported but are not included in the calculation; here, the respondents upgraded their views on production over the previous 3 months but their assessment of export order books deteriorated.
Amongst the largest EU economies, the ESI improved significantly in the Netherlands (+3.5 points) and slightly in Poland (+0.5 points), while it was practically unchanged in France (+0.1). In the other direction, there was a sharp fall in Spain (-2.6), with both Germany and Italy down (-1.0).
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, 10 Member States have an ESI above 100 in this survey – these were Bulgaria, Croatia, Cyprus, Czechia*, Greece, Lithuania, Malta*, the Netherlands*, Portugal and Spain (those marked * improved compared to their “July” figures to rise above the threshold in “August”). Ireland fell from exactly 100 last month and so dropped out of this list. The EU candidate countries also participate in this survey, with Albania and Montenegro above their long-run base threshold.
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.