The European Commission says the Business Climate Indicator declined in the Eurozone in April and the Economic Sentiment Indicator fell in both the Eurozone and EU.
Business Climate Indicator for the Eurozone declines in April
After a slight rebound in March, the Business Climate Indicator (BCI) for the Eurozone decreased again in April. The current level of the indicator still continues to suggest above historical average industrial production growth, but the decline points to a weakening of the monthly growth rates in the second quarter of 2008.
Nearly all the components of the BCI worsened, production expectations being the only exception, which remained unchanged. Industry managers' appraisals of the production trend in recent months and of their total order books deteriorated sharply. Their assessments concerning export order books and stocks of finished products declined more moderately.
The BCI is based on a factor analysis of the Eurozone aggregate balances (seasonally adjusted) of five of the monthly questions in the industry survey (only employment and selling-price expectations are excluded).
Economic sentiment declines markedly in both the EU and the Eurozone
In April, the Economic Sentiment Indicator (ESI) decreased by 3.8 points in the EU and by 2.5 points in the Eurozone, to 98.1 and 97.1 respectively. The fall in the EU indicator more than offset the rebound registered in March. In both regions, the ESI now stands below its long-term average.
The decrease in the sentiment indicator for the EU reflects a decline in confidence across all five sectors, with a marked drop in services and retail trade. In the Eurozone, sectoral developments were broadly similar; with the exception of consumer confidence, which remained unchanged from March.
A large majority of countries reported decreasing sentiment in April. Confidence is worsening in all large Member States, notably so in the UK (-8.9). The declines are more moderate in the Netherlands (-4.5), Spain (-3.2), and France (-2.5), while they are small in Italy (-1.6), Poland (-1.4), and Germany (-1.2).
