News

Euro area economic sentiment indicators for the fourth quarter point to a continued strengthening of economic activity. The average value of the composite Purchasing Managers’ Index (PMI) in the fourth quarter of this year hit a three-and-a-half-year high. The Economic Sentiment Indicator (ESI) for the euro area also reached its highest level since April 2023. Compared with October, confidence strengthened in most sectors (except industry), while consumer confidence remained unchanged. Sentiment was also more favourable than in November last year, with confidence markedly higher in construction and industry. By contrast, in Germany, Europe’s largest economy, the economic climate deteriorated in December. According to its December outlook, the OECD expects euro area GDP growth to ease modestly from 1.3% in 2025 to 1.2% in 2026, before increasing to 1.4% in 2027. Growth will be dampened by higher trade barriers but supported by improved financial conditions, continued investment under the Recovery and Resilience Facility, and a resilient labour market. The outlook is subject to considerable uncertainty, particularly regarding the future evolution of trade barriers.

Goods exports continue to decline, while activity in manufacturing has strengthened in recent months, particularly in high- and medium-low-technology industries. Growth is strengthening primarily in construction and also in most market services. The negative monthly developments in manufacturing have come to a halt in recent months; production continues to increase in high- and medium-low-technology industries (seasonally adjusted). On a year-on-year basis, however, manufacturing output remained lower than a year earlier, declining by 1.1% over the first ten months of the year. Although expectations regarding future production in manufacturing improved further in October, order books remained at a low level. Real goods exports declined on a monthly basis for the third consecutive month in October, falling back to the level recorded in April. The decline was driven mainly by exports to EU countries. Among products, exports of metals and metal products decreased, while exports of pharmaceuticals and other chemical products increased. In the first ten months of the year, total goods exports remained roughly unchanged year-on-year (–0.1%), while imports rose by 0.7%. In the first ten months, exports and imports of services exceeded their levels from the same period last year (by 3.2% and 4.5%, respectively), reflecting increased trade in most main service groups. In the first ten months of the year, the current account surplus was more than EUR 400 million lower year-on-year, amounting to EUR 2.4 billion. After declining in the first quarter, growth in the value of construction work put in place strengthened markedly from the second quarter onwards and, over the ten-month period, was one tenth higher year-on-year. The values of all types of construction works increased, in particular in the construction of non-residential buildings (16%) and specialised construction activities (15%); growth was also higher in civil engineering (7%), while it remained modest in the construction of residential buildings (1%). Turnover in market services is also strengthening. In the third quarter, it increased markedly on a quarter-on-quarter basis (2.8%). Growth was particularly pronounced in information and communication and was driven primarily by higher sales of computer services on the domestic market. Relatively high turnover growth was also recorded in professional and technical activities. In the first nine months of the year, overall turnover growth in service activities was modest on a year-on-year basis (0.6%). In the same period, year-on-year real growth in turnover was also modest in most trade sectors, with the exception of the sale of motor vehicles, where turnover increased again on a quarter-on-quarter basis in the third quarter. The economic sentiment indicator strengthened further in November and, for the first time in three years, rose above its long-term average.

The number of persons in employment remained 0.4% lower year-on-year in October; after several months of increase, the number of unemployed persons declined slightly in November (seasonally adjusted). With slower growth in the public sector, nominal gross wage growth eased somewhat in September. The number of persons in employment has stagnated for several months (seasonally adjusted), while on a year-on-year basis it was 0.4% lower in the first ten months and in October. The sharpest year-on-year decline was recorded in administrative and support service activities and in communication. The number of unemployed persons declined slightly in November (seasonally adjusted), yet on a year-on-year basis it remained somewhat higher owing to increases recorded in previous months (by 0.2%). The number of long-term unemployed and older unemployed persons continued to be lower than a year earlier (–6.9% and –7.6% respectively), while the number of unemployed young persons was nearly one tenth higher. Year-on-year growth in the average nominal wage (7%) accelerated in September compared with the preceding two months. The higher growth in the public sector (9%) was largely driven by wage growth in education, which, in our assessment, was related to the payment of supplements for teaching and pedagogical obligations. Also in the private sector, growth remained relatively high (5.8%) amid labour shortages. In the first nine months, the overall average real gross wage increased by 4.5% – by 7.1% in the public sector and by 2.9% in the private sector.

Year-on-year growth in consumer prices (2.3%) in November fell to its lowest level since June 2025, with food and non-alcoholic beverages remaining the largest contributors to overall inflation. Consumer prices in November remained on average unchanged from the previous two months, while year-on-year growth slowed from 3.1% in October to 2.3%. The food and non-alcoholic beverages group remained the largest contributor to year-on-year inflation, although price growth in this category moderated. Slovenian industrial producer prices edged up slightly on a monthly basis in October (0.1%), while year-on-year growth almost doubled (1.7%) amid last year’s lower base and was also higher than price growth on foreign markets (0.9%). Among main industrial groups, consumer goods continued to record the highest year-on-year price growth.

The deficit of the consolidated general government accounts was EUR 453 million higher in the first ten months of this year than in the same period last year, amounting to EUR 1 billion. Revenues rose by 5.7%, well below the growth recorded in the same period last year (10.6%), while expenditure growth eased slightly this year (7.5%) compared to last year (8.8%). This year’s slowdown in revenue growth is related to cyclical factors and last year’s measures that had temporarily boosted social-security contributions and certain tax revenues. Expenditure growth this year was driven primarily by funds allocated to compensation of employees as a result of the implementation of the pay reform, pensions, and certain transfers (payments for new concessions in scheduled public transport services and compensation related to Šoštanj Thermal Power Plant). Capital expenditure is also increasing this year, in particular for the purchase of military equipment. By the end of the year, the deficit is expected to increase further, as planned, mainly due to higher expenditure related to the second tranche of payments under the public sector wage reform, the payment of the winter bonus to public employees and pensioners, and a strengthening of investment spending.