Eurozone Economic Sentiment Hits Seven-Month High

The Eurozone Economic Sentiment Indicator rose for a fourth consecutive month to 98.4 in August 2026, up from a revised 97.1 in July and above market expectations of 97.5. It was the highest reading since January, as businesses and consumers remained hopeful of a resolution to the six-month-long US-Iran war. Confidence improved across all sectors, with sentiment strengthening among manufacturers (-5.3 vs. -6.1), service providers (5.8 vs. 5.1), consumers (-15.5 vs. -15.9), retailers (-5.7 vs. -6.8) and constructors (-5.0 vs. -5.2). Inflation expectations were mixed: consumer expectations rose to 33.0 from 30.4, while manufacturers’ selling-price expectations eased to 16.4 from 17.8. Among the major economies, sentiment improved in France (+2.3), Germany (+1.3) and Italy (+0.8), was broadly stable in the Netherlands (-0.1), and declined in Spain (-2.2).

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).