Euroarea’s economic sentiment rebounds in September as industrial output, retail confidence rise sharply

The European Commission’s Economic Sentiment Indicator (ESI) for the euro area rebounded by 1.4 points to 10.4.9 in September and by 1.8 points to 105.6 for the EU, following three months of negative or flat developments.

Improvement in the euro area’s sentiment was mainly driven by sharp rise in industry sentiment and stronger retail trade and construction confidence. Consumer sentiment recorded relatively negligible gains, whereas services confidence remained unchanged. The ESI was up in all of the five biggest euro-area economies. The strongest rise was seen in the Netherlands and Germany, which recorded a rise of 1.7 and 1.6 in the sentiment respectively, followed by France, Spain and Italy.

Industry sentiment rose by 2.6 points, thanks to managers’ sharply improved assessments of the present level of overall order books that neutralized the hefty losses registered in August. Moreover, production expectations and the stocks of finished products rose positively. Meanwhile, services confidence index remained flat due to unchanged views regarding all components of indicator, such as demand expectations and the past business situation.

Consumer sentiment also rose by 0.3 points.  Rising concerns regarding future employment outweighed the more optimistic savings expectations and views regarding the future general economic situation.

Consumers’ views of their future financial situation continued to be largely unchanged. Retail trade confidence saw a strong rise of 1.6 points, boosted by additional positive views regarding the present and the expectation business situation. Construction sentiment was up 0.8 points as managers’ recorded increased satisfaction about the level of order books and largely unchanged employment expectations.

Meanwhile, selling price expectations strengthened in industry, and to a lesser degree, in construction and services, but they eased slightly in retail trade. Expectations for consumer price rose in September.