After a rebound in May, the Business Climate Indicator (BCI) for the Eurozone decreased in June.
The current level of the indicator suggests that industrial production growth weakened in the second quarter of this year, although it still points to a production growth rate which is above its historical average.
All the five underlying components of the BCI registered a decrease. The industrial managers' appraisal of the production trend in recent months and their total order books deteriorated sharply, while their assessment of the stocks of finished products, production expectations and export order books declined moderately.
Economic sentiment decreases further in both the EU and the Eurozone
In June, the Economic Sentiment Indicator (ESI) continued to decline in both the EU and the Eurozone.
It fell by 2.5 points in the EU and by 2.7 points in the Eurozone, to 94.6 and 94.9 respectively. In both regions, the ESI remains below its long-term average.
The sectoral developments in the two areas were broadly similar and were characterised by a fall in all confidence indicators except for services, which increased slightly. The decline in confidence in the manufacturing sector was more marked in the Eurozone than in the EU.
The large majority of countries reported a fall in sentiment in June. Among the large Member States, Spain registered a significant drop (-6.2), while declines were more moderate in
France (-2.7), Germany (-1.5), and Italy (-0.1). In the UK, sentiment recovered (+2.1) but still remains below its longterm average.
According to the bi-annual industrial investment survey, which was carried out in March and April of this year, most managers expect to increase their investment volumes in 2008 as compared to 2007. In 2008, real investment is expected to grow by 5% in the EU and 6% in the Eurozone. This represents an upward revision of expectations from the 3% in both regions reported in the previous investment survey conducted during the fourth quarter of 2007.
