Services Sentiment

The Services confidence indicator, from the European Commission's Directorate-General for Economic and Financial Affairs (DG ECFIN), tracks services managers' views. It runs monthly under the Joint Harmonised EU Programme of Business and Consumer Surveys, answered by a panel of firms through national institutes.

It covers 37 services divisions in NACE Rev. 2 sections H to N and R to S. It excludes public services, retail trade and most financial firms. It reflects qualitative opinions, not output figures, and unlike a PMI it has no 50 line.

Fieldwork usually covers weeks 1 to 3 of each month. Business replies are due at least 5 working days before month-end, and consumer replies 7 working days before. Full results appear 2 working days before month-end, except December results, which appear in early January. Seasonally adjusted series can be revised each release, and country weights are updated each January.

Each release also shows 5 sectoral confidence indicators, the Economic Sentiment Indicator (ESI) and detailed tables. It also reports the Employment Expectations Indicator (EEI), the Economic Uncertainty Indicator (EUI) and the Labour Hoarding Indicator (LHI). Quarterly results appear in the January, April, July and October releases, and investment results in April and November. A flash consumer reading comes about a week before the full release.

The indicator is the simple average of 3 equally weighted questions, with one-third weight each.

• Business situation, past 3 months: Managers' assessment of their firm's recent overall situation.
• Demand/turnover, past 3 months: Actual recent demand for the firm's services.
• Demand/turnover, next 3 months: Expected demand for the firm's services over the next 3 months.

In April 2020, euro-area services confidence fell 32.7 points from -2.3 to -35.0, its lowest level on record against a long-term average of 7.3. Expected demand led the fall to -48.4, past business situation fell to -31.3, and past demand fell to -25.3. Past demand did not set a new low, as its minimum stayed at -26.2 from April 2009.

Industry stayed above its March 2009 low, while services took the hardest hit alongside retail trade. No data could be collected in Italy, so euro-area values assumed the same change as the aggregate excluding Italy.

1. Replies: Strata report shares for rise, no change and fall, weighted by size measures like turnover, employment or production. Then strata combine by activity weight.
2. Balance: Subtract the negative share from the positive share, in points, ranging from -100 to 100.
3. Country weighting: Euro-area replies weight each state by its share in services gross value added at constant prices. The weights use a centred 3-year moving average, updated each January.
4. Seasonal adjustment: Balances are cleaned of regular seasonal swings to allow month-on-month comparison, using TRAMO-SEATS with automatic outlier detection in JDemetra+ since May 2022.
5. Averaging: Add the 3 seasonally adjusted balances and divide by 3, with no standardisation first, so the result keeps the balance scale. For example, (5 + 0 + 10) / 3 = 5.0 points.