Eurozone confidence surveys issued today, point to continued optimism in January 2009.

Business Climate Indicator improves further

The Business Climate Indicator (BCI) for the Eurozone rose for the tenth successive month.

Nevertheless it remains at a low level, suggesting that year-on-year growth in industrial production was still negative in December.

The significant increase in the BCI reflects managers' optimism about order books and production expectations. At the same time their assessment of production trend observed in recent months was more subdued. The declining level of stocks confirmed further destocking.

Economic Sentiment Indicator approaching its long-term average

In January, the Economic Sentiment Indicator (ESI) rose for the tenth successive month and stood at 97.1 (+2.1 points) in the EU and 95.7 (+1.6) in the Eurozone. Thus, although the rebound appears to be slowing, the indicator is now back at a level approaching its long-term average in both areas.

The majority of Member States reported a general improvement in sentiment. Among the largest Member States, Italy (+4.2 points) reported the most significant increase, followed by the UK (+3.2) and the Netherlands (+2.7). The improvements were less marked in Poland (+0.9), Germany (+0.6), France (+0.6) and Spain (+0.3).

Sentiment in industry, which increased by 3 points in the EU and by 2 points in the Eurozone, remained the main contributor to the overall improvement. Most respondents in this sector reported strong improvement in both their order books and their production expectations. The declining level of stocks, across all the main industrial sectors, confirmed further destocking. The results of the quarterly manufacturing survey confirmed these positive developments. The survey participants were optimistic about past and future orders. Firms also reported an increase in their capacity utilisation rates which now stands at 73.1% in the EU and 72.4% in the Eurozone, although these are still far below their respective averages.

Confidence among consumers improved slightly in the EU (+1 point) and remained unchanged in the Eurozone. The general economic outlook and decreasing unemployment fears contributed to the overall improvement. Confidence in services increased by 2 points in the Eurozone, while it remained unchanged in the EU, mainly due to falling confidence in the UK. In retail, confidence increased by 3 points in the EU and by 5 points in the Eurozone; these results, however, were mainly driven by a very strong increase in Italy. In contrast, construction continued to decline, dropping by 1 point in both the EU and the Eurozone.

Confidence in financial services - - which is not included in the ESI - - is now stabilising at around the pre-crisis level. It remained broadly unchanged in the EU and improved by 6 points in the Eurozone.

The Eurozone (EA16) consists of 16 Member States: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland plus the European Central Bank.