The Economic Sentiment Index (ESI) compiled by the European Commission was broadly stable in November for both the EU and the Euro-zone. Industry confidence improved but this was offset by a decline in the service sector. The biannual investment survey results show a neutral outlook for 2024 and a modest positive balance for 2025.
The European Commission (EC) draws from a range of surveys to construct confidence indicators for five sectors of the economy and then uses these to calculate up its Economic Sentiment Indicator (ESI) which is converted to an index based on the long-run average. Although dated November, the data collection period was from 1st to 21st, so the trends really refer to October and the 3-month periods of August to October and November to January 2025.
As noted above, by sector there was an improvement in confidence for industry and retail sales but a reduction among consumers and in the service sector, while construction was broadly neutral. For industry, which recovered some of the ground lost in the two previous months, this calculation is based on three questions – expectations for production over the coming 3 months, an assessment of stocks of finished products and current level of order books – and all of them showed an improvement in “November”.
There are two other questions which are not included in the calculation of industry confidence and there was a similar improvement in both output over the previous 3 months and export order books.
Amongst the largest EU economies, the ESI improved significantly in France (+3.0 points), Spain (+2.1) and the Netherlands (+1.5), with a more modest improvement in Poland (+0.7). There was a small reduction in Italy (-0.3 points) but Germany (-1.3) was the weakest of the major economies this month.
As noted above, the ESI is calculated against the long-run average, so we can look at the position of the individual countries against their own historical situation which is the best way to compare between countries. In the latest report, eleven Member States have an ESI above 100 in this survey – these were Bulgaria, Croatia, Cyprus, Denmark, Greece, Lithuania, Malta, Netherlands (new into the group this month), Portugal, Romania and Spain. The EU candidate countries also participate in this survey, with Albania, Montenegro, North Macedonia and Serbia also having an ESI reading above their respective long-run averages – only Turkiye in this group is below the threshold.
This report also includes the latest results of the biannual investment outlook survey. This asks the likely direction of investment in the respondent’s company over calendar years – for the Autumn edition this covers the current year (2024) and next year (2025). This shows the share of managers in the EU manufacturing industry expecting an increase in their investments in 2024 was lower than the share of managers expecting a decrease, resulting in a balance of -1% of positive over negative opinions – this is markedly lower than in the March/April 2024 survey (+10%). For 2025, the balance of assessments expecting an increase rather than a decrease of investments compared to 2024 stood at +5%.
You can download the EC report and statistical annex from their website at https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/business-and-consumer-surveys/download-business-and-consumer-survey-data/press-releases_en (open the 2024 box) or you can request it from MTA.