June 2010 euro zone business, economic sentiment indicators unchanged

June 2010 euro zone business, economic sentiment indicators unchanged

In June 2010, the Business Climate Indicator (BCI) for the 16-member euro zone remained unchanged after 14 months of uninterrupted improvement, European Union statistics office Eurostat said on June 29. "The current level of the indicator suggests that the recovery of economic activity in industry will continue in the coming months, although it may lose momentum," according to Eurostat. The net effect of managers' more gloomy assessment of the past production trend and more upbeat opinion about their total and export order books led to no change in the BCI, Eurostat said. Meanwhile, managers' assessment of their stocks of finished products remained unchanged, as well as their production expectations for the months ahead. In June 2010, the Economic Sentiment Indicator (ESI) in the euro zone remained broadly unchanged at 100.1 (down by 0.1 points) in the EU and at 98.7 (up by 0.3 points) in the euro area. Among the largest EU member states, the UK (-3 points) reported the biggest drop in sentiment (especially in industry), followed by France (-2.3) and the Netherlands (- 2.0). In contrast, Spain (+2.3) reported the most significant increase - although this was from one of the lowest levels in the euro area, Eurostat said. Improvements were less pronounced in Italy (+1.4). Sentiment in Germany (+0.4) and in Poland (-0.5) remained broadly unchanged. There was no clear cross-sector pattern, according to Eurostat. Sentiment in industry declined by one point in the EU on more cautious production expectations. Fewer managers reported insufficient stocks of finished products. Sentiment remained unchanged in the euro area, where managers - despite unchanged production expectations - were more upbeat about their order books. Confidence in services improved by two points in the EU and by one point in the euro zone, driven by a brighter assessment of the business situation over the past three months. At the same time, managers' expectations of demand weakened in the euro area and remained unchanged in the EU. Sentiment in construction dropped by two points in both the EU and the euro area, while it remained unchanged in the retail sector in both regions. After a sharp decline in May, confidence among consumers remained unchanged in the EU and improved marginally in the euro area (by one point), where unemployment fears continued to ease and consumers were more optimistic about the general economic situation. Confidence in financial services - which is not included in the ESI - recorded a significant drop in the EU (-7), driven mainly by a negative assessment of the business situation and demand over the past three months. In the euro area the decline was less pronounced (-1), according to Eurostat.

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