The European Commission’s Economic Sentiment Indicator (ESI) is a composite index comprised of five differently-weighted sectoral confidence indicators. It is heavily weighted towards confidence surveys from the business sector; the consumer confidence sub-index only accounts for 20% of the ESI. However, it has a good relationship with euro-area GDP, although not in the sense of a leading indicator.
The ESI recorded a reading of 102.7, down from June’s reading of 103.3 but above the market’s expected figure of 103.0. The average reading is 100, so the latest reading can be described as being just above average.
Overall sentiment in the euro-area deteriorated as four of the five sub-indices faltered and only the consumer confidence sub-index improved. On a geographical basis, the ESI rose in Italy and Spain, remained unchanged in France but it decreased noticeably in Germany.