In March 2010, the Economic Sentiment Indicator (ESI) improved significantly, reaching 99.6 (+2.0 points) in the EU and 97.7 (+1.8) in the euro area, the European Commission said on March 29.

After the pause recorded in February, the upward trend appears to have regained its momentum.

The ESI is now close to its long-term average, albeit it will still require further improvement for the economic activity to reach its pre-crisis level.

Most EU member states reported a general improvement in sentiment.

Among the largest member states, Germany (+3.4 points) reported the most significant increase, followed by Poland (+2.7), the UK (+2.6) and the Netherlands (+2.4).

The improvements were less marked in France (+1.4) and Spain (+1.4).

Sentiment in Italy deteriorated moderately (-1.5).

However, this overall improvement masks divergences across countries, with sentiment being broadly at its long-term average in some member states (Poland, Germany, France, Italy), while others are lagging behind (the Netherlands, Portugal, Spain and Greece).

Sentiment in industry increased by two points in the EU and by three points in the euro area.

This sharp rebound in confidence, picking up again after having levelled off in February, was the main driver of the overall improvement, with Germany contributing the most.

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 one point in the EU and remained unchanged in the euro area.

The retail sector improved by one point in the EU and by two points in the euro area. Positive signals emerged also in construction, which increased by two points in the EU and by three points in the euro area.

In line with the flash estimate, confidence among consumers remained broadly unchanged in both the EU and the euro area. Across countries, views diverged on the general economic outlook and unemployment expectations, resulting in a generally cautious outlook for both EU and euro-area aggregates.

Confidence in financial services – which is not included in the ESI – improved by 1 point in the EU and declined by 2 points in the euro area. Confidence remains broadly at its pre-crisis level.

In March, the Business Climate Indicator (BCI) for the euro area improved further - marking one year of uninterrupted recovery.

"The rebound of the indicator suggests that economic activity in the industry sector will continue to recover in the coming months, although it has still some way to go to reach its pre-crisis level," the EC said.

Managers in industry were upbeat about their order books and production expectations. They were even more positive about their export order books and production trend observed in recent months. Regarding stocks, they thought that the level was lower than desirable.