The Economic Sentiment Indicator was mainly boosted by the French data, which immediately suggests that optimism around the Olympics boosted sentiment, similar to the PMI. Oddly, it's not the services sector, but the French manufacturers which saw a marked boost in sentiment, up from -9.4 to -3.8. Production expectations have gone through the roof in France, while recent production actually disappointed. There is also a decline in hiring and selling price expectations, which doesn't match the jump in sentiment. Analysts therefore don't want to overinterpret the French jump here.
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Overall, Eurozone manufacturing order books remain weak, recent production did not improve and inventories remain high. This is consistent with a sluggish environment which does not signal an expected turnaround in the short-run.
The service sector saw a small improvement in sentiment, driven by France, Italy and Spain. The small improvement was broad-based as recent demand improved and businesses became more optimistic about the future. Employment and selling price expectations both ticked up a bit in the service sector.
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