Eurozone Economic Sentiment Improves More Than Expected

The Economic Sentiment Indicator for the Eurozone rose to 96.9 in July of 2026 from the upwardly revised 95.4 in the previous month, ahead of the median market consensus of 96. It was the highest reading since February, reflecting an improvement in sentiment from the momentary drop in energy prices and borrowing costs on the short-lived truce in the Middle East war. The confidence indicator for services providers improved to 4.7 from the upwardly revised 4.2. Meanwhile, industrial pessimism softened to -6.1 from 7.5. Among the Euro Area's largest economies, the ESI rose for Germany (97.2 vs 91.6), France (95.9 vs 93.5), Italy (99.6 vs 99.2), and Spain (104.3 vs 103.5).

The Eurozone Economic Sentiment Indicator rose for a second consecutive month to 95.0 in June 2026, moving further from April’s five-year low and surpassing market expectations of 94.3, as businesses and consumers continued to evaluate the economic impact of the Iran war amid ongoing US-Iran peace negotiations. Sectoral confidence showed mixed trends: service providers (3.2 vs. 2.6 in May), retailers (-9.7 vs. -10.9), consumers (-17.7 vs. -19.0), and manufacturers (-7.7 vs. -7.9) saw slight improvements, while confidence among constructors worsened (-4.5 vs. -3.9). On inflation, consumer expectations fell to 34.0 from 40.4, and manufacturers’ selling price expectations eased to 22.3 from 26.7. Among major Eurozone economies, the ESI increased significantly in the Netherlands (+4.1), Germany (+1.7), and Italy (+1.3), while Spain saw a modest rise (+0.7). France’s ESI remained broadly stable (-0.2).

The Eurozone Economic Sentiment Indicator (ESI) rose slightly to 93.5 in May 2026, remaining close to the over five-year low of 93.2 recorded in April but exceeding market expectations of 92.8. Sentiment stayed weak, reflecting mounting concerns over the economic outlook amid the escalating Iran conflict. Among sectors, confidence improved slightly for service providers (2.2 vs. 1.4 in April) and consumers (-19.0 vs. -20.6), but deteriorated further for manufacturers (-8.0 vs. -7.7), retailers (-10.9 vs. -10.0), and constructors (-3.6 vs. -2.8). On the pricing front, consumer inflation expectations fell to 40.5 from a four-year high of 48.8, while manufacturers’ selling price expectations eased to 27.4 from April’s over three-year high of 30.2. In the largest Eurozone economies, the ESI increased in Germany (+1.0) and France (+0.9), remained broadly stable in Italy (+0.1) and Spain (-0.1), and declined in the Netherlands (-0.9).