The Eurozone Economic Sentiment Indicator continued to improve in August while the Business Climate Indicator remained broadly unchanged.

Economic Sentiment Indicator on the up after July's surge: After the surge in July, the Economic Sentiment Indicator (ESI) continued to improve in both the EU and the Eurozone, albeit at a slower pace.

 It rose to 102.7 (up by 0.6 of a point) in the EU and to 101.8 (up by 0.7 of a point) in the Eurozone. In both the EU and the Eurozone the ESI is above its long-term average. Among the largest Member States, the UK registered the most significant gain (+1.5), followed by Germany (+1.1) which remains in the lead. Improvements were less pronounced in Spain (+0.9) and in France (+0.4). In contrast, sentiment deteriorated in Italy (-0.9), Poland (-0.9) and even more so in the Netherlands (-2.1).

Sentiment in industry improved (by 1 point) in the EU and remained broadly unchanged in the Eurozone. The majority of respondents in this sector reported sizeable improvements in their order books. However, managers were cautious regarding their production expectations.

As indicated in the flash estimate released earlier, confidence among consumers improved markedly (+3) in both EU and Eurozone. Widely-felt optimism about the general economic situation as well as further considerable easing of unemployment fears set the tone. Confidence indicator in services decreased by 1 point in the EU and improved by 1 point in the Eurozone. Managers' pessimistic assessment of the past business situation in the UK explains the difference in trends between the two areas. Sentiment in the retail sector gained 1 point in the EU and remained broadly unchanged in the Eurozone. Sentiment indicator in construction remained broadly unchanged in both regions.

After a sharp drop in July, confidence in financial services – not included in the ESI – registered a significant increase in the EU (+7) due to a substantially brighter future demand outlook. In the Eurozone the confidence indicator remained broadly unchanged, after having improved in July.

Business Climate Indicator for the Eurozone remains broadly unchanged: In August, the Business Climate Indicator (BCI) for the Eurozone remained broadly unchanged after the jump observed in July. The level of the indicator suggests that economic activity in industry will continue to recover in the coming months, although it has still some way to go to reach its pre-crisis level.

Managers in industry were more optimistic about their order books; in particular they were upbeat about their export order books. Managers' assessment of production observed in recent months and production and employment expectations remained unchanged. Meanwhile, managers' assessment of their stocks of finished products worsened slightly.