July 2010 saw the euro area Business Climate Indicator (BCI) improve after a "pause" in June, while the Economic Sentiment Indicator (ESI) went up in the EU and the euro zone, strongly influenced by markedly positive readings in Germany.
 
In July, the BCI for the euro area picked up after the pause observed in June, a European Commission media statement said.
 
"The improvement in the indicator suggests that economic activity in industry will continue to recover in the coming months, although it has still some way to go to reach its pre-crisis level," the statement said.
 
Managers in industry were upbeat about their order books and production trend observed in recent months. They were also more optimistic about their export order books. Meanwhile, managers' assessment of their stocks of finished products remained unchanged, and their production expectations were cautious.
 
In July 2010, the ESI edged up to 102.2 (by 1.9 points) in the EU and to 101.3 (by 2.3 points) in the euro area. These results were strongly influenced by markedly positive readings in Germany.
 
Most EU member states reported improvements in sentiment.

Among the largest EU member states, Germany registered the most significant increase (+4.0), followed by France (+2.6), Poland (+1.9) and Italy (+1.7). Improvements were less pronounced in the UK (+1.4) and the Netherlands (+1.2). In contrast, sentiment declined in Spain (-2.2).
 
Sentiment in industry, which increased by two points in both regions, was the main contributor to the overall improvement. Most respondents in this sector reported substantial improvements in their order books.

However, managers were cautious on their production expectations. The quarterly manufacturing survey indicates an increase in capacity utilisation. It now stands at about 77 per cent in both the EU and the euro area, though still below the long term average (81 per cent).
 
Earlier, a flash estimate said that confidence among consumers regained momentum (+3 in the euro area and +1 in the EU).
 
More optimism about the general economic situation and very significant easing unemployment fears in Germany contributed to the overall improvement.

Confidence in services improved by two points in the EU and the euro area, driven by brighter assessments of demand and the business situation over the past three months.
 
Sentiment in the retail sector increased by two points in the euro area and by four points in the EU, mainly owing to upbeat business expectations in the UK and in Germany. Sentiment in construction remained broadly unchanged in both regions.
 
Confidence in financial services – not included in the ESI – recorded the second significant drop in a row in the EU (-6), driven mainly by a sharply negative assessment of expected demand. In the euro area the confidence continued to increase (+3).