Eurozone economic sentiment index rose sharply in January

European Commission said, in January 2020, the Economic Sentiment Indicator (ESI) increased markedly in the euro area (by 1.5 points to 102.8) and the EU (by 1.9 points to 101.3). Economists had expected an increase to 101.8 in the euro area.

Improved euro-area sentiment resulted from marked increases in confidence in the industry and construction sectors. Confidence among consumers and in the services sector remained (virtually) unchanged, while retailers were somewhat less confident. The strong increase in industry confidence (+2.0) resulted from managers' more optimistic views on all three components, i.e. production expectations, the stocks of finished products and, to a lesser extent, the current level of overall order books. Broadly flat developments in services confidence (-0.3) resulted from a worsened assessment of past demand which was mitigated by virtually unchanged views on the past business situation and expected demand. The stability in consumer confidence (± 0.0) reflected households' broadly stable assessments of both their past and future financial situation and a slight increase in their intentions to make major purchases, which was offset by a decrease in their expectations about the general economic situation. Lower retail trade confidence (−0.8) reflected a sharp drop in managers' assessment of both the present and future business situation, which was partly offset by an improvement in retailers' views on the adequacy of the volume of stocks. The marked rise in construction confidence (+1.2) was fuelled by managers' improved assessment of the level of order books, while their employment expectations remained virtually unchanged. Finally, financial services confidence (not included in the ESI) increased noticeably (+4.2), reflecting strong improvements in managers' appraisals of past demand and their assessment of the past business situation and, to a lesser extent, their demand expectations.