In September 2023, the Economic Sentiment Indicator (ESI) dipped slightly again in both the EU (-0.4 points to 92.8) and the euro area (-0.3 points to 93.3). By contrast, the Employment Expectations Indicator (EEI) picked up (+0.6 points to 102.4 in the EU and +0.5 points to 102.7 in the euro area), maintaining its position well above longterm average.
In the EU, the mild decrease of the ESI in September was mostly driven by markedly lower consumer confidence. While confidence among builders and, to a lesser extent, retailers also slipped, it remained broadly stable in services and industry. Amongst the largest EU economies, the ESI deteriorated in Spain (-3.2) and Italy (-2.2), while it improved in France (+2.7). Sentiment in Germany (+0.3), the Netherlands (+0.3) and Poland (-0.1)
remained virtually stable.
Industry confidence confirmed last month’s signs of stabilisation (+0.3). While managers’ opinion on the current level of overall order books continued to worsen, their production expectations improved for the second month in a row and the stocks of finished products were less often assessed as too large/above normal. Among the questions not included in the confidence indicator, the assessment of export order books remained broadly stable, and views on developments in past production were less negative than in the previous month. Services confidence remained broadly stable (-0.1), with more downbeat views on past demand virtually offset by further brightening demand expectations. Managers’ assessments of the past business situation remained broadly unchanged. Consumer confidence (-1.6) declined markedly for the second month in a row, as survey respondents became more pessimistic about their household’s past and future financial situation and the expected general economic situation in their country.
Consumers also signalled decreased intentions to make major purchases. Retail trade confidence edged down (-0.4) on account of deteriorating assessments of the past business situation. By contrast, retailers continued to be more optimistic about the expected business situation. The assessment of the volume of stocks remained broadly unchanged. Construction confidence remained on a downward trend (-0.8), due to a deterioration in both its components (i.e. assessments of the level of order books and employment expectations). The percentage of managers indicating shortages of labour as a constraining factor in construction activity stayed almost unchanged at a high level (+0.3 points, to 28.6%). The prevalence of insufficient demand gained further prominence (+0.7 points, to 28.8%) in builders’ assessments, reaching its highest level since July 2020. Shortage of material and/or equipment as a limiting factor picked up mildly but remained at a level well below that observed over the last two years (+0.7 points, to 9.9%). While the share of builders reporting financial constraints decreased, it remained above long-term average (-0.7 points, to 9.9%).
The Employment Expectations Indicator, which had been on a downward trend since February, picked up (+0.6) on account of more optimistic employment plans among services managers. Employment expectations remained broadly stable in industry and retail trade but continued to worsen among construction managers. Consumers’ unemployment expectations, which are not included in the headline indicator, deteriorated compared to August.
Selling price expectations came down further in services and retail trade but remained elevated. In industry and construction, selling price expectations stabilised at around their long-term average. By contrast, consumers’ price expectations for the next twelve months further increased in September. Consumers’ perceptions of price developments over the past twelve months remained stable at a very high level.
The European Commission’s Economic Uncertainty Indicator (EUI) picked up in September (+1.6 points to 21.1), reflecting slightly higher uncertainty of managers in services, industry, and retail trade about developments in their future business situation, as well as among consumers about their future financial situation. Uncertainty about developments in the construction business decreased.