The Business Climate Indicator (BCI) for the euro area rose for the 11th month in a row. Nevertheless the relatively low level of the indicator suggests that year-on-year growth in industrial production in January 2010 was still negative.

The increase in the BCI reflects managers' positive opinion about both order books and production expectations. Their assessment of production trend observed in recent months was even more optimistic. In contrast, the level of stocks was considered to be still in excess of the optimal level.

In February, the Economic Sentiment Indicator (ESI) remained broadly unchanged, lingering at 97.4 (up by 0.2 points) in the EU and at 95.9 (down by 0.1 point) in the euro area. After 10 months of uninterrupted improvement, the rebound appears to have lost its momentum – though the indicator is now not far off its long-term average, especially in the EU.

Among the largest EU member states, France (-1.9 points) reported the biggest worsening in sentiment (especially in industry), followed by Italy (-1.7). In contrast, Poland (+4.2) reported the most significant increase, while improvements were less pronounced in Spain (+1.1), Germany (+0.9) and in the Netherlands (+0.9). Sentiment was broadly unchanged in the UK (+0.1).

There was no clear pattern across sectors. Sentiment in industry increased by 1 point in the euro area, while it remained unchanged in the EU, mainly due to falling confidence in the UK. Managers in industry were upbeat about their order books and production expectations, whereas the level of stocks was assessed with some caution.

Confidence in services improved by two points in both the EU and the euro area, but in the retail sector it declined by two points in the EU and by four points in the euro area, driven by a significant drop in Germany and Italy. Construction recovered 2 points in the EU, while remaining unchanged in the euro area.

In line with the flash estimate, confidence among consumers deteriorated in both the EU and the euro area. Consumers' perception of the general economic outlook and increasing unemployment fears (especially in Spain and in Italy) contributed to the overall deterioration.

Confidence in financial services – which is not included in the ESI – is now back at its pre-crisis level. It remained unchanged in the EU and improved by two points in the euro area, driven mainly by a positive assessment of the business situation and demand over the past three months.