Indicator down in March
By Eric van Puyvelde | Thursday 29 March 2012
After improving in January and February, the economic sentiment indicator (ESI) decreased in March by 0.8 points in the EU and by 0.1 points in the eurozone, to 93.2 and 94.4, respectively. The decline was mainly driven by decreasing confidence in the industry and construction sectors. By contrast, confidence increased among consumers and in the services and retail trade sectors. This is revealed by the monthly report on the economic climate, which was published, on 29 March, by the European Commission.
Among the largest member states, the UK (-2.5) reported the biggest decrease in sentiment, followed by Germany (-2.4), the Netherlands (-1.3) and Spain (-1.1). By contrast, sentiment improved in Italy (+3.5), Poland (+2.2) and France (+2).
Confidence in industry worsened markedly in both the EU (-1.8) and the eurozone (-1.5). In both regions, managers’ assessment of their companies’ past production and current level of order books deteriorated. At the EU level, also the current assessment of stocks of finished products and export order books deteriorated. However, managers’ production expectations remained broadly stable. Confidence in services improved in both the EU (+0.8) and the eurozone (+0.6). In the EU, managers revised their employment plans upwards in all business sectors except construction. Confidence among consumers improved by 0.8 points in the EU and by 1.2 points in the eurozone, mainly on the back of a strong increase in consumers’ expectations about the general economic situation and an easing of unemployment fears in both regions. Consumers’ assessment of their own financial situation improved slightly in the eurozone, but remained unchanged in the EU.
The ‘Employment and social situation quarterly review’, also released on 29 March by the Commission, shows that, after a moderate recovery during 2010 and early 2011, the European labour market contracted again in the second half of 2011. Since spring 2011, the number of unemployed has been steadily increasing. This new rise has brought unemployment rate to a new high at 10.1 % in January. All large member states, including Germany, are now facing deteriorating labour market prospects, while divergence in performance remains high across member states. To address these challenges, the Commission has confirmed that in April – most likely on 18 April – it will present an employment package. This package will identify opportunities for labour market reforms and job creation (for example ‘green’ jobs, ‘white’ jobs, ICT sector) and set out how EU funds can be used to make long-term investments in human capital.