Decline of Optimism – Poor Mood in Industry, Retail, and Among Consumers

Significantly worsened expectations in the industry have pressured the mood in the Croatian economy in March, a survey by the European Commission showed on Tuesday, and optimism has weakened at the level of the European Union as well.

The Economic Sentiment Index (ESI) in Croatia fell in March from its highest level since joining the European Union, recorded in February, sliding by four points to 114.8 points.

Expectations in the industry weakened the most, as evidenced by a drop in the index of 6.3 points compared to the record value from February, to 11.4 points.

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The mood in retail and among consumers has also significantly worsened. The index measuring expectations in retail fell by four points compared to February, to 11.4 points. The consumer sentiment index dropped by 3.6 points to minus 12.3 points.

The mood in the construction sector has softened slightly, with its index sliding by 0.7 points to 6.9 points. In the services sector, expectations remained at the level of the previous month, with a slight decline in the index compared to February, by 0.1 points, to 19.2 points.

Muted Mood at the EU Level

The economic climate at the EU level has also noticeably worsened in March, as indicated by a drop in the ESI by 1.9 points compared to the previous month, to 112.5 points.

Expectations in the services sector have been the most muted, with its index falling by 2.2 points. Following are retail and industry with a drop in the ESI of 1.8 points each, further distancing the ESI value in the manufacturing sector from the highest level since the Commission began tracking this indicator, recorded at the beginning of the year.

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In the construction sector, expectations have slightly improved, as evidenced by an increase in the index of 0.5 points, while consumer sentiment remained unchanged compared to February.

Among the leading EU economies that are not part of the eurozone, expectations in the British economy have significantly worsened, as indicated by a drop in the ESI by 4.2 points. The Polish ESI has also noticeably fallen by two points, as determined by the Commission.

Retail a Burden in the Eurozone

The ESI for the 19-member eurozone also fell in March, by 1.6 points compared to February, to 112.6 points. In this context, the mood in retail has significantly worsened, as evidenced by a drop in the index by 2.9 points. Following are the manufacturing and services sectors with a drop in the index of 1.6 and 1.3 points, respectively, the EC report shows.

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Only expectations in the construction sector have improved, with its index rising by 0.9 points, while consumer sentiment remained at the level of the previous month.

The report shows that the mood in March worsened in all five leading economies in the area of application of the common European currency, most notably in Germany, whose index fell by 2.4 points compared to February.

Following are Italy and Spain with a drop in the index of 1.8 and 1.2 points, respectively. The mildest deterioration was recorded in the French economy, whose index slid by 0.4 points.

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In a separate report, the European Commission found that the business climate in the eurozone slightly worsened in March, with a drop in the BCI index by 0.14 points compared to February, to 1.34 points.

Managers’ assessments of production in the previous period, as well as stocks of finished products and total order books, have significantly worsened. They have also expressed greater pessimism regarding production in the upcoming period, the EC report shows.