In January, the Economic Sentiment Indicator (ESI) for the EU and the euro area declined again, but less sharply than in the last three months of 2008. Besides, the data released by Eurostat show an increase of unemployment up to 7.4% in the EU27 and 8.0% in the EU15 area in December 2008.

In January, the Economic Sentiment Indicator (ESI) for the EU and the euro area declined again, but less sharply than in the last three months of 2008. It fell by 3.3 points in the EU and by 1.5 points in the euro area, to 64.9 and 68.9, respectively. The indicators for both regions stand at their lowest levels since the current series was launched in January 1985.

The fall in the ESI for both the EU and the euro area is attributed to a general decline in confidence in all sectors, except for the retail trade sector which remained unchanged. Services (-4.9 points in the EU and -4.8 in the euro area) and construction (-4.0 and -3.3, respectively) declined the most among all the five sectors.

The industrial confidence indicator dropped by 1.8 points in the EU and by 0.4 in the euro area, while consumer sentiment dropped by 2.3 points in the EU and by 0.8 in the euro area.

EU Unemployment and inflation rates December 2008

According to the figures released by Eurostat, the Statistical Office of the European Communities, the euro area (EA15) seasonally-adjusted unemployment rate was 8.0% in December 2008, compared with 7.9% in November. It was 7.2% in December 2007. The EU27 unemployment rate was 7.4% in December 2008, compared with 7.3% in November. It was 6.8% in December 2007.

Among the Member States, the lowest unemployment rates were recorded in the Netherlands (2.7%) and Austria (3.9%), and the highest in Spain (14.4%) and Latvia (10.4%).

Inflation rate estimation according to MUICP

As for the inflation rate, Euro area annual inflation is expected to be 1.1% in January 2009 according to a flash estimate issued by Eurostat. It was 1.6% in December 2008.

Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.

The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (16 times exactly anticipating the inflation rate and 8 times differing by 0.1 over the last two years).