EU Economic Sentiment Falls Again in October as Poland Holds Steady

Economic sentiment weakened for a second consecutive month across both the European Union and the euro area in October 2026. The European Commission’s Economic Sentiment Indicator (ESI) fell by 0.6 points to 96.9 in each, as confidence deteriorated among consumers and in services, retail and construction. Industry recorded a modest improvement, while Poland’s overall reading was broadly unchanged.

The ESI combines assessments from households and businesses. October’s decline moved the European indicator further below its long-term average of 100.

Netherlands records sharpest decline; Poland remains stable

Among the EU’s largest economies, the Netherlands recorded the biggest fall, with its ESI down 3.4 points. Germany declined by 0.7 points and Spain by 0.5 points. Italy improved by 0.8 points, while Poland gained 0.2 points and France 0.1 points. The Commission characterised the latter two readings as broadly stable.

Consumers scale back plans for major purchases

EU consumer confidence fell by 1.2 points for the second consecutive monthly decline. Households were more pessimistic about their past and expected financial circumstances, and less inclined to make major purchases. Expectations for the general economic situation were broadly unchanged.

Retail confidence fell by 1.7 points, reflecting weaker assessments of recent business conditions, expectations and stocks. Confidence in services slipped by 0.7 points as firms reported weaker recent demand and business conditions, although their expectations for demand over the next three months improved.

Construction confidence declined by 0.9 points. Better order-book assessments were outweighed by a marked deterioration in hiring plans.

Industrial confidence improves slightly, but demand remains a constraint

Industry was the only surveyed EU sector to improve, with confidence rising 0.3 points on more favourable assessments of finished-goods stocks. Production expectations and overall order books were broadly unchanged. Businesses reported better recent production trends and export order books.

A supplementary quarterly survey showed EU industrial capacity utilisation rising from 77.9% in July to 78.4% in October, still below the long-term average of 80.3%.

Insufficient demand was cited as a production constraint by 33.9% of managers and labour shortages by 17%, both broadly unchanged from July. The share reporting shortages of materials or equipment rose 2.1 percentage points to 14.7%. Financial constraints were cited by 5.6%, up 0.4 points.

Businesses increasingly expect selling prices to rise

Despite weaker sentiment, selling-price expectations rose in all four surveyed business sectors. The indicator increased by 3.4 points in industry, 2.8 in retail, 2.4 in construction and 2.1 in services. In each sector, price expectations moved further above their long-term averages.

These are changes in survey indicators, not forecasts of percentage price increases. Consumers’ assessment of price rises over the previous 12 months increased by 3.9 points, while expectations for inflation over the next year remained unchanged at an elevated level.

Hiring expectations improve despite rising uncertainty

The Employment Expectations Indicator (EEI) rose 0.6 points to 98.9 in the EU and 0.7 points to 98.2 in the euro area. Both remained below their long-term average of 100.

EU hiring expectations improved notably in retail and industry but deteriorated in services and especially construction. Consumer expectations for unemployment were broadly stable.

Meanwhile, the Economic Uncertainty Indicator (EUI) rose 1.7 points to 19.8. Businesses in every surveyed sector reported greater difficulty predicting future conditions, while household uncertainty about personal finances reached its highest level since April 2025.

The survey was conducted between 1 and 22 October. The Commission also revised September results using updated French data and reinstated the Italian consumer survey in the European aggregates.

Source: European Commission, “Business and consumer survey results for October 2026”, 29 October 2026.