According to the report from European Commission, in July 2021, the Economic Sentiment Indicator (ESI) increased for the sixth time in a row in both the EU (+0.9 points) and the euro area (+1.1 points). The current level (118.0 in the EU, 119.0 in the euro area) is the highest on record (i.e. since 1985). Compared to the last months, the latest improvement was much weaker, suggesting that the indicator is approaching its peak. The Employment Expectations Indicator (EEI) stayed flat, at 111.6 points (EU) / 111.7 points (euro area), well above its pre-pandemic level.

In the EU, the ESI’s increase in July was driven by improving confidence in industry and services, while confidence weakened in construction and among consumers and remained virtually unchanged in retail trade.

Amongst the largest EU economies, the ESI rose sharply in France (+4.0) and, to a lesser extent, in Italy (+1.7) and Spain (+1.7). Sentiment in Germany (+0.3) and the Netherlands (-0.3) stayed virtually unchanged, while it deteriorated mildly in Poland (-0.7).

The Employment Expectations Indicator stayed flat (+0.0), as more optimistic employment plans in industry (approaching an all-time high) and retail trade coincided with more cautious reassessments of plans in services and construction. Consumers’ unemployment expectations, which are not included in the headline EEI, edged up, after they had reached their lowest level in two years in June.