The European Commission said today that in May, the Economic Sentiment Indicator (ESI) for the EU and the Eurozone picked up for the second month in a row, albeit from a very low level and at a slower pace than in April, when a clear rebound was observed. The ESI increased by 2.8 points in the EU, and by 2.1 points in the Eurozone, to 66.7 and 69.3 respectively.
This further increase in the ESI resulted from a clear improvement in sentiment in the retail sector which rose markedly in both regions (by 4 points in the EU and by 5 points in the Eurozone), followed by services (up 4 points in the EU and 1 point in the Eurozone). Industry registered a smaller increase (+2 and +1, respectively). Sentiment in both construction and among consumers, in contrast, declined in the EU (by 1 and 2 points respectively) and remained stable in the Eurozone.
The majority of Member States registered an improvement. Among the largest Member States, Italy (+5.3 points), the UK (+4.8), and the Netherlands (+3.1) witnessed significant increases in sentiment, while the rise was less marked in France (+1.5), Poland (+1.2) and Germany (+0.9). Spain, on the other hand, registered a slight decrease (-0.9), resulting from a deterioration of sentiment in services.
The financial services confidence indicator – not included in the ESI – improved by 3 points in the EU and remained stable in the Eurozone. The positive development in the EU reflects a rise in managers' assessment of the business situation, demand for their services, and expectations of demand, whereas the underlying components in the Eurozone show a rather mixed picture.
Business Climate Indicator also continues in May to recover from historical lows
The Business Climate Indicator (BCI) for the Eurozone again increased in May, albeit at a slower pace than in April. This is the first improvement sustained over two consecutive months since May 2008. The indicator nevertheless remained at a very low level, suggesting that year-on-year industrial production growth will have been negative in April and will remain distinctly subdued in May.
The rise in the BCI reflects an improving situation in the underlying components, except for those related to order books. Managers'
production expectations and view of the production trend observed in recent months continued to pick up in May. Managers' assessment of stocks of finished goods also showed an improvement on last month's level, though order books and export order books slightly worsened.
