Eurozone Economic Sentiment Improves Further, But Hiring Expectations Weaken

Economic sentiment across the Eurozone improved further in June, suggesting businesses and consumers are becoming more optimistic about the growth outlook despite lingering economic headwinds. However, firms grew more cautious about hiring, highlighting a widening gap between improving confidence and labor market expectations.

Economic Sentiment Indicator (ESI) rose from 93.7 to 95.0 in the Eurozone and from 93.8 to 95.1 across the EU. Confidence improved in industry, services, retail trade and among consumers, while construction remained the only sector to deteriorate.

Among the largest member states, sentiment strengthened most in the Netherlands, Germany and Italy, while France was broadly unchanged. Industry benefited from improved production expectations and lower inventories of finished goods, while consumer confidence continued to recover as households became less pessimistic about the economic outlook and their future finances.

In contrast, the Employment Expectations Indicator fell from 94.4 to 92.2 in the Eurozone and from 95.2 to 92.9 in the EU, reflecting weaker hiring plans across services, retail trade and construction.

The survey nevertheless offered some encouraging inflation signals. Selling price expectations declined further across all major sectors, while consumers also reported easing perceptions and expectations of inflation, although both remained above historical norms. Economic uncertainty fell for a second consecutive month, suggesting businesses and households are becoming more confident even as employers remain cautious about expanding payrolls.

Full Eurozone and EU economic sentiment release here.