Confidence and Sentiment Indicators-Euro-zone

Euro-zone Confidence and Sentiment Indicators – Euro-zone

Based on the results of numerous surveys, these indicators are designed to forecast the direction of the Euro-zone economy. Each indictor is the balance of positive and negative responses. If there are more optimistic responses the headline figure will be positive, while a greater number of negative responses will result in negative figure. The strength of the sentiment can be seen in the magnitude of the figure.

Euro-zone Business Climate Indicator

Gauges current business conditions in the Euro-zone. Based on industrial sector surveys the BCI strives to provide a timely and clear picture of business sentiment in the Euro-zone. A high or rising Business Climate figure generally indicates a healthy economy and business climate; conversely, a low or declining figure signals an unfavorable or worsening economy. As business and consumer confidence increases we typically see similar increases in investments, production, and consumption and economic growth.

Euro-zone Economic Confidence

An overall gauge of sentiment toward the economy in the Euro-zone. The index is a composite of most of the sector specific surveys done by the European Commission. A high or rising level of Economic Confidence indicates healthy levels of purchasing, business spending, and investment – a positive economic outlook conducive to the strengthening of the economy and the Euro.

Reported in the European Commission’s Business and Consumer Surveys, economic confidence brings together 5 confidence indicators with different weights: Industrial Confidence (40%), Service Confidence (30%), Consumer Confidence (20%), Construction Confidence (5%), and Retail Trade Confidence Indicator (5%).

Euro-zone Consumer Confidence

Measures consumer sentiment in the Euro-zone nations. The figure is the result of Euro-zone consumer surveys personal finance, the job market, the likelihood of saving and expectations on the economy. High levels of consumer confidence bode well for the economy, indicating consumers are more likely to increase consumption spurring growth and potentially sparking inflation. Conversely, low consumer confidence levels suggest decreased spending.

The figure is determined by the difference between positive and negative answers. Therefore a headline above zero indicates positive consumer confidence, while a negative number shows more negative answers.

Euro-zone Industrial Confidence

A measure of industry sentiment in the Euro-zone nations. Based on a survey among industrial executives, Industrial Confidence asks for production expectations. Specifically the European Commission asks about recent orders and buildup of inventories. Higher levels of industrial confidence indicate a positive outlook for future business spending and capital investment. Despite the fact that manufacturing accounts for only about a quarter of Euro-zone business, industry accounts for most of the volatility in GDP. Thus developments here have significant impact on overall growth in Europe.

The figure is determined by the difference between positive and negative answers. A headline above zero indicates positive industrial confidence, while a negative number shows negative confidence.

Euro-zone Services Confidence

A gauge of business sentiment in the services sector. The figure is derived from a survey asking firms in the service sector about current and expected demand. Since the service sector accounts for roughly two thirds of total Euro-zone GDP, Services Confidence provides an important confirmation of the health for the overall economy. High levels of Services Confidence suggest future upward trends for production and employment.

The figure is determined by the difference between positive and negative answers. Therefore a headline above zero indicates positive service sector confidence, while a negative number shows negative confidence

Relevance: Rarely affects markets
Release schedule: 9:00 (GMT); monthly, during the last week of every month
Revisions schedule: No revisions
Source of report: European Commission, Directorate General for Economic and Financial Affairs
Web Address: http://ec.europa.eu/index_en.htm
Release Addresses:
Business Climate http://ec.europa.eu/economy_finance/indicators/businessclimate_en.htm
All Others http://ec.europa.eu/economy_finance/indicators/businessandconsumersurveys_en.htm

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