Eurozone economic sentiment hitting a 21-year high in June

According to the report from the European Commission, in June 2021, the Economic Sentiment Indicator (ESI) increased again strongly in both the EU (+3.0 points) and the euro area (+3.4 points) compared to May. At 117.0 (EU) / 117.9 (EA) points, the ESI by far outstrips its long term average and pre-pandemic level, hitting a 21-year high. The Employment Expectations Indicator (EEI) also increased markedly (+1.2 points to 111.5 in the EU and +1.6 points to 111.6 in the euro area), bringing it to the highest level since November 2018 in both areas.

In the EU, the ESI’s increase was propelled by improving confidence in the services sector, but all other surveyed business sectors (i.e. industry, retail trade, construction) and consumers recorded an improvement, too. At the country level, the ESI reached an all-time high in Germany (+5.0) and increased also in Italy (+2.1), the Netherlands (+1.9), France (+1.3) and Poland (+0.2). Of the six largest EU countries, only Spain saw a slight decline (-1.1).

Industry confidence increased for the seventh month in a row (+0.9) and reached a new all-time high. Services confidence posted its fourth significant improvement in a row (+6.0), hitting the highest since February 2018, and returning to well above its long-term average. Consumer confidence increased for the fifth time in a row (+1.5), driven by an improvement in all its components. Retail trade confidence rose for the fourth time in a row (+3.8). Construction confidence improved (+0.6), as managers posted better appraisals of the level of order books, despite slightly less optimistic employment expectations. Finally, financial services confidence (not included in the ESI) increased strongly again in June (+8.4), thanks to managers’ more positive appraisals of the past business situation, past demand and demand expectations.