According to the report from European Commission, after the partial recovery of sentiment between May and September and the broad sideways movement in October, the drop is the first one since sentiment fell sharply in the first COVID-19 wave. The Employment Expectations Indicator (EEI) posted the second monthly decline in a row (down by 3.3 points in both regions to 86.6 in the euro area and 87.2 in the EU).

In the euro area, the ESI’s decline was fuelled by diving confidence in retail trade, services and among consumers. Sentiment in industry and construction held up rather well, posting comparatively mild deteriorations. Industry confidence edged down (-0.9), ending its six months rally which had brought the indicator almost back to its level prior to the outbreak of COVID-19 in Europe. Services confidence took a hit (-5.2), sealing the end of its recovery, for which October’s broadly flat readings had already provided some indication. Consumer confidence posted the second monthly decline (-2.1), as households reported growing concerns about the expected general economic situation and their expected financial situation, which were matched by more cautious intentions to make major purchases. Retail trade confidence saw an abrupt end to its six-months recovery (-5.8), as retailers’ expected business situation nosedived and their appraisals of the present business situation and the adequacy of the volume of stocks got more tepid. Construction confidence eased moderately (-1.0), due to worsened appraisals of the level of order books and, to a lesser extent, more cautious employment expectations. Finally, last month’s decline in financial services confidence (not included in the ESI) intensified (-10.9), reflecting deteriorations in all its components (past business situation, past demand and, particularly, demand expectations).