Business Climate Indicator increased markedly in March
In March 2015 the Business Climate Indicator (BCI) for the euro area increased markedly (by 0.14points to +0.23). Managers’ production expectations, as well as their views on the level of past production, overall order books and export order books improved significantly; by contrast, their assessment of stocks of finished products remained virtually unchanged.
March 2015: Economic Sentiment improves further in the euro area and the EU
In March the Economic Sentiment Indicator (ESI) improved in both the euro area (by 1.6 points to 103.9) and the EU (by 0.9 points to 106.1), continuing the upward trend observed since the beginning of 2015.
Euro area developments
The improvement in euro-area sentiment was fuelled by brightening confidence among consumers, but confidence also improved among managers in retail trade, services, construction and, particularly, industry. Amongst the largest euro-area economies, the ESI rose significantly in Italy (+2.4), Germany (+1.8), Spain (+1.7) and, somewhat less markedly, the Netherlands (+0.9). In France, the headline indicator increased only marginally (+0.4).
The marked improvement in industry confidence (+1.7) reflected managers’ more optimistic views on expected production and the current level of overall order books; by contrast, their assessment of the stocks of finished products remained broadly stable. As regards the questions not included in the confidence indicator, both managers’ assessment of past production and their views on export order books improved markedly. Increasing services confidence (+0.7) was driven by managers’ significantly brighter views on past demand, while the assessment of demand expectations and the past business situation remained broadly stable. The surge in consumer confidence (+3.0) was backed by consumers’ significantly more positive assessment of future unemployment together with upward revisions of their views on the future general economic situation, future savings and, to a lesser extent, their financial situation. The positive development in retail trade confidence (+0.6) was driven by managers’ more positive views on the expected business situation, while their assessment of the present business situation and the adequacy of the volume of stocks worsened. The increase in construction confidence (+0.9) resulted from upward revisions in managers’ employment expectations, while their assessment of the level of order books remained broadly unchanged. Financial services confidence (not included in the ESI) improved (+0.8), reflecting more positive appraisals of demand expectations and past demand outweighing a worsened assessment of the past business situation.
Employment plans were revised upwards across all business sectors, most significantly so in retail trade and construction. Selling price expectations increased in industry, construction and, to a lesser extent, services, while remaining broadly stable in the retail trade sector. Also consumer price expectations picked up in March.
EU developments
The slighter increase of the headline indicator for the EU (+0.9) was mainly due to the deterioration in the largest non-euro area EU economies, Poland (-0.4) and, particularly, the UK (-2.7). EU confidence among consumers and retail trade improved in line with the euro area; by contrast, confidence in construction dropped, while confidence in industry and services increased only marginally.
Employment expectations paralleled euro-area developments in industry and retail trade, while EU managers reported a downward revision in construction and a stabilisation in services. Also price expectations among consumers and in business sectors were broadly in line with those for the euro area, the major exceptions being stable price developments in construction and a downward revision in retail trade. Finally, financial services confidence improved in line with the euro area, but more marginally so.
