In September, the Economic Sentiment Indicator (ESI) declined strongly by 3.4 points in both the EU and the euro area, reaching the level of 94.0 and 95.0, respectively. The decrease reflects broad-based cross-sector deterioration in sentiment, with particularly strong losses in confidence in industry and services. In addition the data for the Business Climate Indicator (BCI) showed for the euro area fell for the seven month in a row and is now in slightly negative territory.

Both indicators, the Economic Sentiment and the Business Climate shows a strong decrease in the euro area and in the EU in September 2011. With regard to the first one indicator, the Economic Sentiment declined by 3.4 points in both the EU and the euro area, reaching the level of 94.0 and 95.0, respectively. In August, the Economic Sentiment for the EU and the euro zone were down further too. Although confidence in industry remains above its long-term average, it worsened strongly, by 3.3 points in the EU and by 3.2 points in the euro area, on the back of a drop in production expectations and managers' appraisal of the level of order books. Moreover, sentiment in services decreased in both the EU (-2.8) and the euro area (-3.7). In both regions, past and expected demand was assessed as markedly worse. With regard to the confidence among consumers, it worsened in both the EU (-2.3) and the euro area (-2.6). In both regions consumers were more pessimistic about the future general economic situation and expressed higher unemployment fears. It also decreased the confidence in financial services – not included in the ESI – decreased in both the EU (-3.5) and in the euro area (-1.2), mainly on because of managers' negative assessment of recent developments in business situation and demand.

Italy (-5.1 points), France (-3.5) and the UK (-3.4) reported the biggest decreases in sentiment, followed by Germany (-2.1), Spain (-1.8), the Netherlands (-1.7) and Poland (-1.1). The ESI is now above its long-term average only in Germany.

On the Business Climate Indicator, this one fell for the seven month in a row and is now in slightly negative territory. The steady fall observed since March indicates a further slowdown, although growth in euro-area industry output remains positive. The drop in the BCI in September reflected a more pessimistic assessment by managers about overall order books and export order books. However, the assessment of production trends observed in recent months improved, compensating – although only very partially –for the strong decreases registered in the previous two months.