Highest value in 21 years: high spirits among companies in the euro zone

The economy in the euro zone is emerging from the crisis with momentum. The ESI indicator collected by the EU Commission, which reflects the mood in companies, rose to its highest level in 21 years.

Despite the uncertainties resulting from the spreading delta variant, the mood in companies in the euro area is better than it has been in years. The Economic Sentiment Indicator (ESI) published monthly by the EU Commission rose by 3.4 points to 117.9 points compared to the previous month. This means that the indicator is already well above the level at the beginning of the Corona crisis and reached its highest level since 2000.

Much confidence among service providers and in retail

The current value surprised analysts, who on average had only expected significantly lower growth. The ESI increase in June was the fifth plus in a row. The mood brightened in all areas examined in the current month. The indicators improved particularly strongly in the sectors of service providers and retailers, which were hard hit by the Corona restrictions.

The ESI is a composite indicator that summarizes and weights responses from companies in five sectors. These areas are industry, services, consumer, retail and construction. Values ​​above 100 in the overall index indicate an above-average economic assessment by the companies surveyed.

Industry is gaining momentum in Germany

For the euro zone as a whole, but also in the individual countries, the mood rose in the vast majority of the economic sectors examined. The value for the industrial sector improved from 11.5 to 12.7 points within a month. In the service sector it went up from 11.3 to 17.9 points. In retail, the value rose from 0.5 to 4.5 points.

In Germany, the top values ​​were also achieved in industry (growth from 18.6 to 21.4 points) and in the service sector (from 12.8 to 23.8 points). The retail sector was in negative territory here, however, which improved from minus 6.5 to minus 4.5 points. The consequences of the lockdown measures with many business closings could still be felt here.

Delivery bottlenecks still noticeable

In the June survey, the overall improvement was “on a broad basis”, commented Claus Vistesen, chief economist for the euro zone at the analysis company Pantheon Macroeconomics. However, the survey results also confirmed that companies are still struggling with delivery bottlenecks. He referred to the production expectations of industrial companies. These have fallen, although incoming orders have recently increased.

The survey by the EU Commission confirms surveys that have recently been carried out regularly among the managers responsible for purchasing in companies. Last week, the corresponding index from the market research company IHS Markit also reached its highest value in 15 years. In June, the index value for the mood of purchasing managers in the euro zone rose to 59.2 points, the highest level in 15 years.