The European Commission’s economic sentiment indicator edged down marginally by 0.1 points to 96.8 in the EU and fell 0.4 points to 96.7 in the euro area in December 2025, while the employment expectations Indicator slipped 0.9 points in both regions to 97.9 and 96.8 respectively, signalling rising caution over hiring, according to the European Commission’s Business and Consumer Survey.

Germany recorded the biggest drop at 1.1 points, followed by France at 0.9, Italy at 0.6 and Spain at 0.5. In contrast, confidence improved in Poland, up 1.1 points, and in the Netherlands, which gained 0.5 points, European Commission said in a press release.

EU economic sentiment stayed below trend in December 2025 as hiring plans weakened across retail despite a modest improvement in industry confidence.
Germany, France, Italy and Spain saw falling sentiment, while Poland and the Netherlands improved.
Consumer confidence was steady, but inflation concerns rose.
Retail remained weak and overall uncertainty eased slightly.

Sector-wise, industry confidence improved slightly, rising 0.5 points as managers reported stronger production expectations and healthier order books, although higher stocks of finished goods partly offset the gains. Export order book assessments also became less pessimistic.

Consumer confidence was broadly stable, slipping just 0.1 points. Households were less pessimistic about their recent financial situation but concerns about future finances and the overall economic outlook weighed on sentiment. Intentions to make major purchases over the next twelve months remained flat.

Retail trade was the weakest link, with confidence falling 0.8 points due to poorer assessments of past business conditions and stock levels, despite slightly improved short-term outlooks.

The decline in the employment expectations indicator was driven by weaker hiring plans in retail, although industry managers turned modestly more optimistic. The EU’s labour hoarding indicator edged up to 9.4 but remained below its long-term average.

Inflation concerns remained prominent. Retail prices were expected to ease. Consumers, meanwhile, reported a sharp rise in both perceived and expected inflation over the next twelve months, keeping price pressures elevated.

Economic uncertainty eased slightly, with the economic uncertainty indicator down 0.4 points. While uncertainty declined in industry, it increased in retail leaving the overall outlook for early 2026 cautious but stable.

Fibre2Fashion News Desk (SG)