Economic sentiment decreases markedly in the euro area in June

According to the report from Eurostat, in June 2019, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.9 points to 103.3) and the EU (by 1.5 points to 102.3).

The deterioration of euro-area sentiment was driven by lower confidence in industry and, to a lesser extent, in services and among consumers, while confidence improved in retail trade and, particularly, construction. The ESI decreased in all of the largest euro-area economies, most so in Germany (-2.9), followed by Italy, the Netherlands (both -1.5), France (-1.0) and Spain (-0.6).

Industry confidence posted a sharp decline (−2.7), which constitutes, together with a commensurate drop in April, the most significant decrease in about eight years. The latest deterioration brought the indicator for the first time since autumn 2013 slightly below its long-term average. The decline in services confidence (−1.1) was driven by managers' more pessimistic views on all its components, i.e. the past business situation and past demand, as well as demand expectations. Consumer confidence eased (-0.7), reflecting households’ more negative views on all its components, namely their past and future financial situation, their expectations about the general economic situation and their intentions to make major purchases. Retail trade confidence improved (+1.0) on the back of managers’ better assessments of the present and expected business

situation. Construction confidence bounced back (+3.6) from a sharp decline in May, thanks to a strong rebound in managers’ employment expectations and a slight improvement in the appraisals of the level of order books. Finally, financial services confidence (not included in the ESI) remained broadly unchanged (−0.3).