According to the report from European Commission, in March 2021, the Economic Sentiment Indicator (ESI) improved sharply in both the EU (+6.9 points to 100.0) and the euro area (+7.6 points to 101.0). For the first time since the outbreak of COVID-19 on the continent, the ESI is back at (EU), or slightly above (EA), its long-term average. Also the Employment Expectations Indicator (EEI) saw a forceful increase (+6.1 points to 98.0 in the EU and +6.8 points to 97.7 in the euro area), bringing the indicator in both regions close to its long-term average.

In the EU, the ESI’s increase in March was driven by improving confidence in all surveyed business sectors (i.e. industry, services, retail trade, construction) and among consumers. The increases were of a magnitude not seen since last summer’s steep recovery following the first phase of the pandemic. 

Industry confidence increased for the fourth month in a row (+4.6), thanks to very positive developments in all its components, i.e. managers’ production expectations, their assessments of the current level of overall order books and the adequacy of the stocks of finished products. Services confidence (+7.0) posted the first sharp pick-up since September last year, driven by managers’ much more optimistic demand expectations and, to a lesser extent, more positive views on the past business situation and past demand. 

Consumer confidence firmed (+3.6), as households’ expectations improved both in respect of the general economic situation in their country, and their personal situation, as measured by their future financial situation and their intentions to make major purchases.

The rise in retail trade confidence (+6.1) reflected marked improvements in all components of the indicator. Construction confidence brightened (+4.4) thanks to managers’ significantly improved employment expectations and appraisals of the level of order books. When compared to the other sectors, the improvement in financial services confidence (not included in the ESI) was comparatively mild by the standards of the typical fluctuations of the indicator (+5.2). All its components improved, i.e. managers’ appraisals of past demand and the past business situation, as well as their demand  expectations.