Economic sentiment in Croatia improved in October on the back of confidence in industry and retail trade and consumers signalling that they plan to save less, a European Commission survey showed on Monday.

The Economic Sentiment Index (ESI) in Croatia increased by 0.9 points from September to 106.1 points in October, the EC reported.

The greatest optimism was expressed by business leaders in industry, encouraged by production trends in the past months. They predicted a significant improvement in the coming months as well, as a result of which the ESI increased by 3.5 points compared to September.

Managers in the retail sector signalled considerably larger orders, better assessed their business results in the past months and expected additional improvement towards the end of the year. Retail trade confidence increased by 2.1 points in October.

Consumers were also more optimistic, better assessing the financial situation in their households over the past year and indicating improvement in their forecasts for the next 12 months and plans to save less in the next year. Consumer confidence increased by 1.5 points.

In Croatia, services confidence in October remained at the September level.

A deterioration was expected only by business leaders in the construction sector, with construction confidence falling by 1.7 points from September.

Managers in the economic sector as a whole expected to employ significantly fewer workers in the coming months, as the Employment Expectations Indicator fell by 2.2 points. They also said that business uncertainty had eased compared to September, as shown by the drop in the Economic Uncertainty Indicator of three points compared to September.

Economic sentiment broadly stable in euro area and EU

Economic sentiment was broadly stable in the euro area and the EU in October as muted sentiment in retail trade offset the improvement in the services sector.

Retail trade confidence decreased markedly, by 1.4 points, reflecting worsened assessments of developments in the past business situation as well as stocks that were more often considered as too large/above normal.

Services confidence edged up (+0.4) thanks to a marked improvement in managers’ demand expectations, partially offset by a worsened assessment of past demand and a stable assessment of the past business situation.

Industry confidence and construction confidence were broadly stable, and consumer confidence also remained unchanged.

Managers in industry and retail intend to hire less in the coming months, unlike those in the services and construction sectors, so the overall value of the Employment Expectations Indicator remained almost unchanged compared to September.

The Economic Uncertainty Indicator increased by 1.1 points from September, reflecting managers’ uncertainty about their future business situation in construction as well as consumers’ uncertainty about their future financial situation.

Among the largest EU economies, economic sentiment improved in Poland (+1.4) and Spain (+1.2), while deteriorating markedly in France (-2.9).