Economic Sentiment Index In Euro Area Drops In April

The Economic Sentiment Indicator (ESI), which is a key indicator for economic sentiments in both the European Union (EU) and the euro area plunged in April at the steepest rate of monthly decline ever recorded for the index, showed official data.

There was a 27.2 points drop in the ESI in the euro area compared to the value of the index in the previous month to touch 67.0 points in April while the drop for the same index for the EU was by 28.8 points to reach 65.8 points in April, said the European Commission in a statement.

The ESI reading has a long-term average of 100. The Commission said that the current value of the index is perilously close to its lowest level ever that was registered during the recession in March 2009.

An exceptionally strong fall in the confidence of consumers one the economy as well as in all of the business sectors was the major reason for the collapse in the ESI in the euro area. the European Commission noted in the statement that the fall was mainly seen in the services segment and retail trade.

The steepest fall among the largest euro area economies was noted for the Netherlands where the index fell by 32.6 points. The fall in the value of the index was also high in Spain and Germany with drops of 26 points and 19.9 points respectively.

However, strict lockdown measures in Italy did not allow the collection of data, noted the statement from the European Commission, while it also noted that in many countries, the response rate to the survey was lower than usual. The second factor could be instrumental in the final figures being inaccurate and less comparable across countries than usual.

An exceptional decrease of 32.7 points in the confidence index was reported in the euro area service sector. That decline was driven by record-breaking deteriorations in expected demand. On the other hand there was a drop of 19.2 point in the euro area manufacturing industry confidence primarily because of crashing production expectations. However the index for manufacturing remained about the record low of March 2009.

The report said that there was also a drop of 11.1 point in consumer confidence which showed the plunge in expectations of households related to the general economic situation and also their own financial situation.

The report also noted that the  Employment Expectations Indicator also plunged to its lowest on record as the index for April dropped by 30.1 points to 63.7 in the euro area and by 31.2 points to 63.3 in the EU.

(Adapted from

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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