Amid reserved optimism that at least some of Europe’s economies are on the road from economic crisis to post-recession recovery, new statistics have emerged indicating improvements in economic and business sentiments.
 
In August 2009, the Economic Sentiment Indicator (ESI) for the European Union and the euro area continued to improve, according to a statement on August 28 2009 by Eurostat, the bloc’s statistics office.
 
The improvement in August the fifth consecutive increase in both series since the trough in March 2009.
 
The ESI increased markedly – by 5.9 points in the EU, and by 4.6 points in the euro area – to 80.9 and 80.6, respectively. However, in both areas, the level is still far below the long-term average.
 
Recovery of the industrial confidence indicator continued, backed by a strong increase in production expectations and manufacturers' assessment of order books.
 
Managers' assessment of the level of stocks also showed an improvement. Still, stocks of finished goods, production expectations and order books remain well below their long-term averages.
 
The increase in the ESI resulted from a general improvement in sentiment in all sectors in the EU and in all sectors except retail trade in the euro area.
 
Services gained considerably in both the EU (+8 points) and the euro area (+7). Industry continued to improve from the trough in March, climbing by four points in both areas.
 
Sentiment among consumers and in construction also registered a marginal improvement of 1 point in both areas. Retail trade picked up in the EU (+2) but decreased slightly in the euro area (-1).
 
Most EU member states registered an improvement.
 
Among the largest member states, the UK (+9.7 points), the Netherlands (+7.6) and Germany (+5.1) recorded the most significant increases in sentiment, though the rise was also noteworthy in Poland (+4.5), Italy (+3.8) and Spain (+2.9).
 
The financial services confidence indicator – not included in the ESI – moved up by seven points in both areas.
 
While managers' expectations of demand for the next three months and assessment of that over the past three months improved markedly, their assessment of the business situation fell back substantially after the improvement registered last month.
 
The Business Climate Indicator (BCI) for the euro area increased again in August 2009.
 
However, the level is still very low, even when compared to the previous historical lows of 1993.
 
This suggests that year-on-year industrial production growth will have been negative in July and will remain subdued in August.
 
The rise in the BCI reflects an overall improvement. In particular, managers' production expectations and their perception of the production trend observed in recent months increased for the fifth month in a row and the improvement has been particularly strong for the production trend.
 
Both order books and export order books continued to improve from the trough reached in June. Managers' opinion of stocks of finished goods improved as well, even though the level of stocks was still considered excessive, Eurostat said.