Euroarea economic sentiment indicator rises in January

Euro area’s economic sentiment indicator rose in January to 108.2 from 107.8 in December. Market expectations were for the sentiment to rise to 107.9. The mildly positive developments in the eurozone sentiment came from rebounds in industry, services and consumer confidence that offset drops in retail trade and construction confidence. Amongst the biggest euro area nations, the economic sentiment index dropped only in France, while it rose robustly in Spain, Italy and the Netherlands and stayed widely same in Germany.

Rising industry sentiment in the euro area resulted from managers’ more optimistic production expectations, while their assessments of the current level of overall order books and their stocks of finished products were widely unchanged. Managers’ assessment of past production deteriorated significantly, while their views on export order books rebounded.

Positive developments in services sentiment was due to managers’ positive assessments of past demand and the past business situation that were partially countered by a smaller fall in their demand expectations. Consumer sentiment rose slightly by 0.4, owing to more optimistic unemployment and savings expectations that offset deteriorating expectations about both general economic situation and household’s financial situation.

Retail trade sentiment dropped 1.1, showing negative views on all three components. Meanwhile, construction sentiment fell 0.7 points due to a downward revision in managers’ employment expectations while their assessment of the level of order books stayed widely unchanged.