Industrial Sentiment

The industrial confidence indicator sums up manufacturing sentiment in the EU.

It belongs to the EU Business and Consumer Surveys programme, the EU system that asks firms and households matching questions.

The programme began with an industry survey in 1962.

DG ECFIN, the European Commission economics department, runs it.

It polls about 38,000 manufacturers in 27 EU countries plus 5 candidate countries, drawing about 30,000 replies.

It records opinions on factory activity, not measured output, and tracks year-on-year growth in industrial production as its reference.

Fieldwork happens in the first 2 to 3 weeks of each month, and results reach the Commission at least 5 working days before month end.

Full results appear 2 working days before month end at 11h00 Brussels time.

A flash consumer estimate arrives around the 20th of each month at 16h00.

Each release also reports services, retail, construction and consumer confidence plus broad sentiment, hiring expectations, uncertainty and labour-hoarding gauges.

Quarterly factory detail arrives in January, April, July and October, investment detail in April and November, and December results shift to early January.

The indicator averages 3 factory questions, each carrying the same weight.

• Production expectations: expected factory output over the next 3 months.
• Total order books: whether current orders look above normal, normal or below normal.
• Stocks of finished products: unsold goods on hand, counted in reverse because full shelves signal weak demand.

In April 2020 EU industry confidence stood at -30.6, down from -10.7 in March 2020.

The 19.9-point fall still left it above the March 2009 low of -36.8.

Crashing output expectations drove the fall as order books also tumbled.

Services sank to -35.4 and retail trade to -27.7, while the sentiment gauge fell 28.8 points to 65.8.

Stocks rose only moderately because supply-chain breaks offset weak demand, showing the inverted part can move against the headline.

Factory capacity use dived to 70.1%, 10.7 points below January, and low response rates made country comparisons less reliable than usual.

1. Reply shares: in each size and activity group, count the % choosing each answer, sometimes weighted by turnover or staff.
2. National aggregation: average groups by economic weight so the reply shares sum to 100.
3. Balance: subtract the negative % from the positive % for each question, giving points from -100 to +100.

For example, 30% up minus 20% down gives +10.

1. EU average: combine country results using each country's share of industrial value added, the output value minus inputs, smoothed over 3 years.
2. Seasonal adjustment: remove normal seasonal swings with Tramo-Seats plus automatic outlier detection, in use since May 1, 2022, with settings refreshed each January.
3. Final average: average the 3 adjusted balances and flip the stocks sign, so high stocks drag the index down. The formula is (Q5 + Q2 - Q4) / 3.

An example with +10, -5 and 0 gives (+10 - 5 + 0) / 3 = +1.7.

Key point: -30.6 means pessimists outnumbered optimists by 30.6 points on average, not a 30.6% output fall and not a below-50 contraction call.

It keeps the scale of a balance and never uses the 100-based sentiment scale.