Eurozone economic confidence weakened notably in August as the economic sentiment indicator, compiled by the European Commission, declined to 97.6 points from 99 in July. This marked the lowest reading since February 2021 and reflected widespread downward momentum across the major economies of the euro area, with Spain being an exception to the trend.
Across the European Union as a whole, economic confidence held at 96.5 points in August, the weakest result since January 2021, compared with 97.5 in the prior month. The softer tone in confidence mirrors a pullback in industrial sentiment and, to a lesser degree, in services, while some stabilisation appeared in retail, construction, and consumer expectations.
The August drop in the European confidence indicator highlights a broad slowdown in industry and a softer outlook for services, though pockets of resilience were visible in retail activity, construction projects, and consumer sentiment in certain member states. The pattern underscores how manufacturing cycles, supply chain dynamics, and demand conditions are shaping sentiment across the region. (European Commission)
The Netherlands posted the sharpest drop
The deterioration in confidence was most pronounced in the Netherlands, one of the largest EU economies by population and output, where the indicator fell notably. Other significant declines were seen in Germany, France, and Poland, each registering sizable declines, with Italy also posting a negative reading. In contrast, Spain bucked the trend, showing a modest improvement in August. (European Commission)
The Netherlands experienced one of the steepest declines, while Germany, France, and Poland also recorded meaningful losses in confidence, signaling a broad-based cooling of economic expectations among major euro-area economies. Italy and other economies faced smaller reductions, whereas Spain registered a positive shift, hinting at diverging momentum within the euro area. (European Commission)
Spain, in particular, held steady at 97.9 in August after 97.1 in July. This stabilization aligns with solid gains in consumer confidence, retail activity, and construction, suggesting strengthening domestic demand components that could support broader economic stability in the near term. (European Commission)
Spain’s industry sentiment was softer, with the index for industry dropping to -5.4 in August from -4.8 in July, the weakest since February of the previous year. Services sector resilience, however, showed tentative signs of staying above the critical levels, with the confidence gauge for services slipping to 14.5 from a previous 15.1, reflecting the nuanced mix of sectoral pressures and stabilization in some service areas. (European Commission)
The August readings collectively point to a nuanced picture: while some areas face easing confidence, others maintain footholds that could cushion the overall trajectory. Analysts in Canada and the United States often monitor the euro area for broader global demand implications, given close trade links and the spillover effects of euro-area sentiment on export-oriented sectors. (European Commission)